The ongoing Russia-Ukraine conflict has spurred a renewed interest in cryptocurrency after emergency martial law measures were introduced by Ukraine’s central bank this past week, according to CNBC.
Foreign currency cash withdrawals are currently prohibited in Ukraine and the country’s central bank has limited withdrawals of local cash to 100,000 Ukrainian hryvnia per day, or roughly $3,339, under martial law.
This has led some Ukrainians to increasingly turn to cryptocurrency. “We don’t trust the government. We don’t trust the banking system. We don’t trust the local currency,” Michael Chobanian, the founder of popular Ukrainian crypto exchange Kuna, told CoinDesk. “The majority of people have nothing else to choose apart from crypto.”
However, while crypto has emerged as another avenue to route money, it also is a potential way for Russia to insulate itself from sanctions, experts point out: “Crypto will be a way for Ukrainians to skirt any issues with their own currency, but also a method for Russia to avoid some of the sanctions,” CEO of iVest+ Rance Masheck told The Street Crypto.
Last October, officials from Russia’s central bank declared that the digital ruble, Moscow’s forthcoming central bank digital currency, would reduce the country’s economic dependence on the U.S. and help the country skirt sanctions.
Additionally, experts believe Russian hacking methods like ransomware could help Moscow recoup revenue otherwise lost to sanctions.
Although Ukraine does not recognize Bitcoin or other cryptocurrencies as legal tender, earlier this month it passed a bill legalizing cryptocurrencies. “Market participants will receive legal protection and the opportunity to make decisions based on open consultations with government agencies,” Ukraine Deputy Prime Minister and Minister for Digital Transformation Mykhailo Fedorov said in a statement.
Ukraine is currently ranked fourth on by Chainalysis’ Global Crypto Adoption Index.
Fedorov said that legalizing cryptocurrency would pave the way for better protection for consumers: “Ukrainians could protect their assets from possible abuse or fraud,” Fedorov said.