How Cryptocurrency Is Aiding Ukrainian Refugees
In just over a month after Russia began its invasion of Ukraine, there are now over 3.7 million refugees fleeing the war in Ukraine (UNHCR). According to an analysis by Pew Research Center on the sheer number of refugees, this makes Ukraine’s current refugee crisis among the 10 worst refugee crises in recent times.
While this is the largest humanitarian crisis Ukraine has faced in recent history, the young nation is no stranger to conflict with neighboring powers. In fact, since 2015, Ukraine has been among the ten countries with the largest population of internally displaced people worldwide, with over 1.4 million internally displaced peoples. Perhaps it is a result of this embroiled history that causes Ukraine to be uniquely forward focused. Historian Timothy Snyder characterizes the Ukrainian persona as one “focused on what they’re doing,” rather than one stuck on painful historical narratives. This is certainly evident across Ukraine’s swift and valiant response to Russia’s invasion, and further confirmed by the country’s immediate deployment of cryptocurrency and blockchain-enabled technologies like NFTs to support both the war efforts in-country, and the 3.7 million citizens fleeing out of the country.
Ukraine is a thriving technology hub with high cryptocurrency adoption.
Ukraine is home to a thriving technology ecosystem, often referred to as Eastern Europe’s Silicon Valley. In 2019, Ukraine established a Ministry of Digital Transformation which sought to increase citizens’ digital literacy and make all government services available online. Further, in Chainalysis’ 2021 Global Crypto Adoption Index, Ukraine ranked fourth in the world for cryptocurrency usage. Needless to say, Ukraine was well positioned to leverage cryptocurrency in response to the sudden crisis caused by Russia’s invasion.
Days after the war began, the government posted digital wallets on Twitter to solicit donations, and is now working with leading cryptocurrency exchanges like Kuna to support its cryptocurrency-based fundraising. The Ukrainian government has reportedly raised over $100 million in cryptocurrency-based donations to date, making up 60 percent of all donations received. Additionally, the government recently launched the MetaHistory Museum of War, an NFT museum that commemorates this historical moment and offers a unique way for individuals to give toward the effort. By receiving donations through these avenues, Ukraine is able to raise funds quickly, efficiently, and with minimal value loss due to inflation – all unique characteristics of cryptocurrency’s value in delivering humanitarian aid. Indeed, Ukraine is finding innovative ways to advance cryptocurrency’s use case, creating ripple effects across the global digital financial ecosystem.
How cryptocurrency is aiding Ukrainian refugees
In contrast, as soon as the war began, Ukraine’s financial system limited ATM withdrawals and suspended electronic cash transfers, making it nearly impossible for citizens to access their life savings. Further, high rates of inflation have drastically reduced the value of Ukrainians’ bank accounts, a devastating scenario in any circumstance. Many refugees have followed the lead of their government, turning to cryptocurrency to move their money across borders. Family and friends overseas can also send money via cryptocurrency to support their fleeing loved ones, making sure the funds reach them quickly and with minimal fees. This allows refugees to fully circumvent the long lines and complex regulations at banks and withdraw cash at a cryptocurrency ATM or through peer-to-peer trading.
Additionally, with remote work so common, many refugees have continued working their jobs and earning a living after relocating to another country. There is a subset of Ukrainian refugees who are storing their wealth in cryptocurrency as a safeguard against the economic impact of the war and continuing with life as normally as possible given the circumstances. This is a rare scenario made possible in part by cryptocurrency.
However, this image of a tech savvy Ukrainian refugee is only a small percentage of the millions of Ukrainian refugees seeking safety across Europe and the world. Most refugees have not been able to take advantage of cryptocurrency and are living day-to-day in shelters with little access to their bank accounts and fully reliant on aid. The situation is dire for many, which begs the question: how might more refugees gain access to cryptocurrency to strengthen their financial resilience in this crisis?
Implications for global cryptocurrency adoption
President Volodymyr Zelenskyy has now passed a law to legalize cryptocurrency in the country which provides a legislative framework for the widespread adoption of virtual assets. President Biden also recently issued an Executive Order calling for coordination among federal agencies on cryptocurrency regulation and signaling the government recognition of cryptocurrency as the “future of money.” These policy shifts lay the groundwork for cryptocurrency’s upward arc in history.
At the global, national, and individual level, Ukrainians have resiliently adapted and valiantly responded to Russia’s assault on their country. Cryptocurrency has played an important role in this historic moment, and it seems that there is no looking back on the critical gap cryptocurrency has filled as Ukraine sought out secure, efficiently transferable funds valid in any country.
For now, the optimistic view might be that their refugee statuses are temporary, with plans to return home to Ukraine once the war is over. Always forward thinking, Michael Chobanian, founder of Kuna and President of Blockchain Association of Ukraine is quoted with the hopeful refrain, “When we win the war, we will rebuild Ukraine using blockchain technology. All of us were helped by crypto.”
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