Cross-border, censorship-avoiding cryptocurrencies play an "important role" in fundraising for the Russia-Ukraine crisis

As tensions on the Russian-Ukrainian border continue to escalate, data shows that Ukrainian non-governmental organizations and volunteer groups are using Bitcoin donations to crowdfund to strengthen the country's armed forces.

According to a report by blockchain analysis company Elliptic on February 9, as concerns about Russia's attack on Ukraine grow, the amount of Bitcoin donations received by Ukrainian non-governmental organizations and volunteer groups has surged to hundreds of thousands of dollars. Some of these organizations are using these funds to provide auxiliary military equipment to government forces or directly provide armed materials and manpower.

The report noted that these Ukrainian civil society organizations are generally funded by private donors, who have donated millions of dollars through bank wires and payment applications. "Cryptocurrency donations still only account for a small portion of the donations received by the parties to the conflict, but it has proven to be an increasingly popular alternative financing method," Elliptic wrote.

Tom Robinson, chief scientist at Elliptic, said: “Cryptocurrencies are increasingly being used to crowdfund wars with the tacit approval of governments.”

"Cryptocurrency is particularly suitable for international fundraising activities because it can ignore national borders and avoid censorship. There is no central authority that can prevent transactions from taking place, so it is very useful in situations such as circumventing sanctions," Robinson said.

The report shows that these civil organizations and groups raised only $6,000 in cryptocurrency in 2020. In 2021, the cryptocurrency donations received by these organizations jumped to more than $570,000, an increase of 900% over the previous year.

The report also stated that Ukrainian civil groups will use the raised cryptocurrencies for various purposes, including purchasing military equipment, medical supplies and drones for the Ukrainian army, as well as funding the development of facial recognition applications to identify Russian mercenaries or spies.

A Ukrainian organization called Come Back Alive began accepting cryptocurrency donations in 2018 to provide weapons, equipment, training services and medical supplies to the military. The organization said that the Bitcoin donations they received surged to $200,000 in the second half of 2021.

Another group , the Ukrainian Cyber ​​Alliance, claims that it raises funds only through cryptocurrencies. In the past year, the group has received nearly $100,000 worth of Bitcoin, Litecoin, Ethereum, and various stablecoins. Elliptic's report said that since 2016, members of the group have been involved in cyberattacks against Russian targets.

The Myrotvotrets Center, a non-governmental organization based in Kyiv, Ukraine, has been accepting cryptocurrency donations since 2016 and is currently developing a facial recognition application that can identify "rebels, Russian mercenaries and war criminals" based on photos. So far, the Peacemaker Center claims it has received more than 100 Bitcoin donations and raised at least $267,000.

In addition, the report also pointed out that since some Ukrainian civil society organizations that received cryptocurrency donations have very close ties with the country's government, this "promotes the trend of the country using cryptocurrency as a means of fundraising."

Since the second half of 2021, Ukraine has been taking various steps to accept cryptocurrencies at the national level.

According to the Bitcoin information website Coindesk, Ukrainian President Zelensky signed a law in July 2021, officially authorizing the country's central bank to issue its own central bank digital currency (CBDC).

According to Euronews, in September of the same year, the Ukrainian parliament almost unanimously passed a bill to legalize and regulate virtual assets such as cryptocurrencies. Currently, the Ukrainian president and parliament are discussing the bill repeatedly. If the bill is passed, it will greatly promote the country's encryption technology out of the legal gray area.

The country plans to open its cryptocurrency market to businesses and investors by 2022, according to the Kyiv Post, and senior government officials have been touting their crypto street cred to Silicon Valley investors and venture capital funds.

During an official state visit to the United States in August 2021, Zelensky talked about the "legal innovation market for virtual assets" being developed in Ukraine as a selling point to attract investment. Ukrainian Minister of Digital Transformation Fedorov said that Ukraine is modernizing the payment market so that its central bank can issue digital currency.