Weekly. How Cryptocurrencies Went to War

Cut off whether Russia is from the international financial system – or at least from the West – and faced with a market that is no longer liquid, ruble holders have found in crypto-assets a way to move money and , above all, to protect against the devaluation of the Russian currency, which lost 16% of its value against the euro from Sunday to Wednesday.

Faced with this dramatic devaluation, halted in part by the Central Bank of Russia by raising the benchmark interest rate from 9.5% to 20%, ruble holders rushed to buy bitcoins.

The volume of purchases of the most popular cryptocurrency through the Russian currency totaled 1.33 billion rubles on February 24 – the day the military invasion began – the equivalent, at the exchange rate on Wednesday, of 11.2 million euros. On February 27, the Sunday when the West imposed heavy sanctions on Moscow, the volume of transactions reached 855 million rubles (7 million euros), and the following Monday the volume reached 1 billion rubles (8.4 million euros). The increases compared to the volumes traded on the 23rd represent respectively 267%, 136% and 177%, according to data from the specialized site CryptoCompare consulted by Expresso.

However, the Ukrainian state opened a way to finance the operations of resistance to the Russian invasion. In addition to the Kyiv government, organizations such as Come Back Alive, founded in 2014 to support the Ukrainian military, collect crypto money. As of March 2, according to data from crypto data firm Elliptic seen by Expresso, 48,000 donations had been made, totaling the equivalent of US$37.9 million (€34 million) since the 24. polkadot (and co-founder of the Ethereum blockchain protocol), Gavin Wood, donated $5.8 million (€5.2 million) in crypto out of his own pocket. A copy of the most popular non-fungible tokens (NFTs), the non-fungible assets that carry the CryptoPunks name, worth $200,000 (€179,000) has been donated to the cause. And on Wednesday, the auction of an NFT of the Ukrainian flag promoted by a collective founded, among others, by the Russian feminist group Pussy Riot, brought in 5.7 million euros bound for Kiev.

Mykhailo Fedorov, Ukrainian Deputy Prime Minister and Minister of Digital Transformation, issued a call on his Twitter account for donations and crypto exchanges to follow the example of traditional financial institutions and ban the wallets of Russian citizens.

Cryptocurrencies do not align with sanctions and value

But big crypto exchanges like Binance aren’t keen on following the sanctions, citing the ideological reasons behind the creation of the first cryptocurrency, bitcoin. Quoted by the “Financial Times”, a spokesperson for the largest platform for buying and selling crypto by volumes traded said that “it would be a complete contradiction to the reasons for the existence of crypto”, a system fully decentralized payment and value storage. and distributed and, therefore, protected from the unilateral decisions of institutions and political powers. Trading volumes on Binance — which allows the buying and selling of more than 500 tokens — more than doubled from the 23rd to the 24th, from 31 billion euros to 68 billion euros on average, after be normalized (with a further rise to 42 billion euros on February 28 and March 1) in the following days, according to data from the crypto statistics platform Nomics consulted by Expresso.

Finance ministers and central bank governors from the G7 and European Union countries are watching. According to German Finance Minister Christian Lindner, speaking to Welt TV on Wednesday, ways are being explored to extend sanctions to the crypto world, limiting the ability of Russian oligarchs to move capital through this parallel system.

The most popular cryptocurrencies have benefited from the turmoil in Eastern Europe and have managed to appreciate since the 28th, when the sanctions against Russia came into force, resulting in sharp declines in the markets shares. From Monday to Wednesday, bitcoin appreciated by 15% and was around US$44,000 (€39,000). Ether, from the Ethereum blockchain protocol, the most widely used token after bitcoin, saw its value grow by 14% over the same period, to 2,982 US$ (2,670 €). Still, they are a far cry from the highs of November 2021, with bitcoin surpassing US$68,000 (€61,000) and ether hitting US$4,891 (€4,406).

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