- Russia is dealing with the repercussions of the outbreak of the unprovoked war.
- Despite hosting all 17 million miners, the Russian crypto market is suffering as exchanges boycott the services.
- Ukraine receives massive global support through crypto donations.
From farmers struggling to buy fertilizer to people paying hefty sums at gas stations; From stores running out of cooking oil to nations reconsidering their alliances, Russia’s invasion of Ukraine has triggered countless seismic repercussions. However, beyond the rapidly expanding refugee crisis, unprecedented sanctions, and upheaval in global relations, lies a massive financial massacre with cryptocurrency at the heart of it.
The snowballing economic crisis, followed by Vladimir Putin’s nationwide attack on Ukraine, has already impacted many sectors, including energy, oil, food and technology. agriculture, trade, foreign exchange, import and export, among others. This conflict is also expected to shrink the Russian economy by 11.2%
Moreover, the nation’s 40-year effort to build a thriving market economy, which began under the leadership of Mikhail Gorbachev, is believed to have failed miserably because of Putin’s unprovoked war. Moreover, since the start of the war on February 24, 2022, more than 300 world-famous brands have voluntarily halted services or recalled operations from Russia, citing the conflict.
Besides playing a crucial role in this conflict, cryptocurrency is also an important tool for ordinary Russian citizens to resist financial totalitarianism. Therefore, the weight must be borne by both the economy and the citizens of the nation. Here is an overview of the consequences of the dispute on the digital economy.
Russia’s multi-billion dollar crypto industry is crippled
Although Russia is the world’s third-largest bitcoin mining hub, US officials have targeted its bitcoin mining company BitRiver, seeing it as a potential threat to the effectiveness of its sanctions regime. In detail, officials expressed concern that the Russian government could monetize its vast reserve of oil and natural resources with energy-intensive crypto mining as a way to raise funds against Western sanctions.
US officials have banned miners from accessing US crypto exchanges or mining equipment to ensure that no asset becomes a mechanism for the Putin regime to offset the impact of sanctions.
The number of crypto users in Russia is also expected to deteriorate with the collapse in value of the Russian ruble, despite the fact that it has over 17 million cryptocurrency owners/traders. Coverage of a market where more than 12% of citizens own cryptocurrencies (50% more than the ownership rate among Americans), with such a sanction penalizing everyone in the economy, in every way
Additionally, major cryptocurrency exchanges like Binance and Coinbase have suspended thousands of Russian-linked accounts and wallets on suspicion of illicit activity. Mastercard Inc and VISA Inc blocked several Russian financial institutions from their payment gateway and recently several Russian banks were removed from Society for Worldwide Interbank Financial Telecommunications (SWIFT) by UK, US, European Commission and several other EU states. .
Ukraine receives sympathy in the form of cryptos
Ukraine has raised over $60 million in crypto donations since the invasion began. Over $10 million has been donated directly to crypto wallets after the Ukrainian government solicited donations in bitcoin, Ethereum, and tether.
Ukrainian President Volodymyr Zelenskyy has signed a Virtual Assets Bill that will recognize cryptocurrencies as an asset in the country after the end of the war.