What lessons can we learn from the (mis)use of cryptocurrencies in the Ukraine war?
- In times of crisis, cryptocurrencies emerge as safe ways to store wealth along with gold or the Swiss Franc. For instance, the volume sold of bitcoins jumped tenfolds in Russia since the start of the war.
- The effectiveness of cryptocurrencies in bypassing sanctions is less than it may be thought. Namely, cryptocurrencies lose their anonymity when they must be converted into FIAT currency (euro, USD or CHF). Crypto exchanges have to implement ‘know your customer’ (KYC) principle, the basis for anti-money-laundering regulations. The majority of crypto exchanges are located in the USA and must adhere to US sanctions laws.
- The fastest and most efficient way to raise funds is through cryptocurrencies. The Ukrainian government raised over US$100 million using crypto tokens.
Next steps: Digital Watch provides more information and analysis about the Ukraine war and cryptocurrencies.
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