Ukraine legalized cryptocurrencies on Thursday even as its tensions with Russia rattled global markets last week amid global concerns over the prospect of a wider war, with more than 100,000 Russian troops nearing the Ukrainian border.
“Ukraine is already in the top 5 countries for using cryptocurrency. Today we took another step: Parliament passed a law on virtual assets! This will legalize exchanges and cryptocurrencies, and Ukrainians could protect their assets from possible abuse or fraud,” Ukrainian Deputy Prime Minister Mykhailo Fedorov said on Twitter.
Bitcoin donations have skyrocketed for Ukrainian volunteers and hacking groups, some of which have provided hardware to government forces, according to a report showing these groups received more than $550,000 worth of cryptocurrency in 2021.
The report, published by blockchain researcher Elliptic on Tuesday, suggests that digital currencies are growing in importance as a method of funding for volunteer groups supporting the Ukrainian government amid fears of an attack by Russian troops massed near its border increase. Moscow denies planning an attack.
A cryptocurrency worth just $6,000 was raised by groups in 2020, Elliptic said.
Cryptocurrencies can be sent and received anonymously, allowing organizations to raise funds even if financial companies do not allow – or impose strict controls – the transfer of funds.
“Cryptocurrency has proven to be a robust and growing alternative (to traditional currency) – especially when it comes to donations from other countries,” Elliptic said.
In 2020, Ukraine tightened controls to combat money laundering, requiring identity verification for certain domestic cash transfers. Cross-border transfers are also subject to mandatory supervision, according to the National Bar Association of Ukraine.
Elliptic tracks the movement of cryptocurrency on the blockchain for financial firms and government agencies. He said that a Kyiv-based group, Come Back Alive, started raising crypto funds in 2018 and received nearly $200,000 worth of crypto in the second half of 2021 alone.
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