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In February, Russia's invasion of Ukraine triggered the biggest international conflict in years – and the first major conflict since cryptocurrency went mainstream. The conflict created economic problems for people in both countries, though Ukraine has suffered far more because the fighting is taking place on its territory, and millions of its people have been displaced.

While governments and organizations from across the world have provided traditional aid to Ukraine, some groups and individuals have taken advantage of cryptocurrency to deliver aid more directly. Additionally, refugees have been able to use cryptocurrency to support themselves while abroad, demonstrating how crypto can be used to help individuals in need.


Aid to Ukraine

Just days before the invasion, Ukraine's parliament officially legalized cryptocurrency. In the weeks since the invasion, tens of millions of dollars worth of crypto have been raised to help the country.

Aid from the digital asset space has flowed to Ukraine in various ways, from activist-organized DAOs like UkraineDAO, which raised millions for the Ukrainian army, to a variety of NFTslaunched to raise funds for organizations working to help the country.

The Ukrainian government has also been active, setting up a crypto wallet that collected almost $10 million in just the first few days of the war and over $60 million by April. By one estimate, over $116 million in crypto has been donated to the country so far. In late March, the government also launched an NFT collection, with proceeds going to the country's Ministry of Digital Transformation.


Financial Lifeline for Refugees, Immigrants, and Expats

In addition to aid for Ukraine's government and military, crypto has provided a lifeline for many who have left their home. While Ukrainians account for the vast majority of people displaced by the conflict – millions have left as refugees to neighboring countries, including Poland, Hungary, Moldova (and some, particularly in the east, even going to Russia), many Russians have sought to leave their country as well due to the changes in the domestic situation caused by the invasion, such as a law that criminalizes criticism of the Russian armed forces . Both groups have faced challenges leaving with their money or accessing their money while outside their home country.

For Ukrainians, the challenge largely stems from domestic measures designed to prevent a financial crisis, such as a suspension of electronic cash transfers and limits on ATM withdrawals. These measures have made it hard for Ukrainians to access their money, especially while abroad, where they may not even be able to open an account at a local bank. Refugees with crypto have been able to use their digital assets to cover their expenses, leveraging Bitcoin ATMs and protocols like the Lightning Network.

For Russians, their ability to access their money abroad has been limited by sanctions levied on their country in response to the invasion, which led Western credit card networks like Visa and Mastercard to suspend their operations. This has made the vast majority of cards issued by Russian banks inoperable outside of Russia, leading some to use crypto as a workaround. Though some crypto exchanges, like Coinbase and Metamask, have also suspended Russian accounts under Western sanctions, others remain operational, providing the option of peer-to-peer crypto transactions. While there are concerns that sanctioned entities and individuals could attempt to use crypto to bypass sanctions, existing measures created for KYC/AML compliance, such as wallet blacklisting, make it unlikely that crypto will be used widely for sanction evasion.


What does this mean for crypto?

While crypto donations are a small relative to the billions in aid pledged by foreign governments, every bit helps, and direct aid moves faster than government funds and can be used more quickly with fewer restrictions. As crypto adoption grows, so will the amounts that can be raised.

Additionally, Ukraine's experience provides an example for other countries of how they can use crypto to help their people in emergency situations, be it a military conflict or a natural disaster. In the future, countries in need may end up relying more on direct donations via crypto than NGOs and other aid groups, especially those with underdeveloped financial systems that cannot easily receive funds from abroad via traditional methods.

The experience from this conflict also shows that crypto can be used as a lifeline by displaced people who are cut off from their home country's financial system, unable to participate in their host country's system, or are otherwise unable to access their fiat currency assets. Crypto wallets make it easy for displaced people to receive donations from abroad or even get paid for work they perform while displaced. 

With humanitarian use cases being demonstrated in a real-world scenario, organizations and individuals should begin to see crypto as a necessary asset for meeting their charitable goals or providing immediate support directly to people in need. At the same time, people in danger of displacement or financial system disruption are likely to see having access to crypto as a necessity in case of emergency. Both will only accelerate the adoption of digital assets across the world.

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Tag(s): Cryptocurrency

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