Will Oligarchs Buy Bitcoin?
Money and banking have been a major topic of concern since the most recent conflict, and the invasion of Ukraine began on February 24, 2022. Even before the military invasion, Ukraine was one of the largest crypto adopters in the world, along with Russia and Venezuela. As the world looks to isolate Russia with sanctions, Bitcoin is taking center stage in discussions in the US and around the world.
How Ukraine Was Affected by the Russian Invasion
The National Bank in Ukraine is still running smoothly, according to Kyrylo Shevchenko, Ukraine’s Central Bank Governor. Still, the country and its people have faced challenges, which have inspired Ukrainian government officials to turn to crypto not to stabilize the currency or banking system but to raise money.
In one recent update, Ukrainian officials raised more than $54 million aimed at providing humanitarian support and to aid the fighting efforts in Ukraine. The nature of crypto allows them to receive donations from more than 100,000 individual donations worldwide. Another crypto initiative, the UkraineDAO collective has collected more than $4 million.
It’s now faster and easier than ever before to donate to the Ukrainian government, the humanitarian effort, as well as the displaced people. The uproar surrounding the conflict has been broadcast and widely commented upon in the media and via social platforms, with the majority on the side of the Ukrainian people. That overall-positive vibe has also helped to inspire donors to give money to Ukrainian causes via crypto.
How Have Sanctions Affected Russian Interests?
Russian oligarchs have faced the loss and seizures of their mansions, yachts, and other assets around the world, as NATO cracks down with sanctions on Russian interests and entities. The goal of these sanctions is to hit Russia in its pocketbook to avoid and deter all-out world war or even nuclear conflict. Even as world leaders hand down the sanctions, questions about how crypto may side-step and avoid these sanctions are on everyone’s minds.
Hot on the heels of these international crackdowns is a growing trend of tech-savvy and connected Russians who rely on alternative workarounds via cryptocurrencies and other asset-protection strategies. Bitcoin, Ethereum, and other crypto offer a way for oligarchs and dictators alike to preserve their wealth and potentially protect their assets.
Bitcoin & Oligarchs: Where Is Capital Flowing?
Bitcoin has long been lauded as a way to protect wealth against the falling value of the US Dollar. That’s an important consideration as the Russian ruble falls to historic lows. Beyond Russia’s currency issues, the worldwide sanctions have already hit Russian stocks.
In his interview with Bloomberg, Matthew Sigel, VanEck’s Head of Digital Assets Research, proclaimed the lack of censorship via the Bitcoin network. It doesn’t matter whether you’re an activist for human rights or a dictator. In theory, Bitcoin is an open and “safe” haven via blockchain-based currencies. In short, oligarchs can siphon away wealth in Bitcoin with much greater ease than they can in traditional banks or asset purchases. That could lead to a strong flow of capital towards and into cryptocurrencies in general, and Bitcoin in particular.
Russia Isolated > Bitcoin Boom
Russia’s stock market closed recently, and the European Commission joined the US, UK, and Canada to say they will remove Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT), an international messaging system by financial institutions. It’s part of the effort to restrict and hamper Russia’s ability to overcome and sidestep the sanctions.
With vows from French President Emmanuel Macron that he will inflict the “maximum impact” using sanctions,and many of the world’s leaders taking similarly rigid stances via targeted financial sanctions, travel bans, prohibitions on the export of goods, and a range of other aggressive measures, Bitcoin is an obvious alternative for Russians looking to preserve wealth.
In a world that is fraught with turmoil, Bitcoin offers a solution to help them weather the storm.
What Is Bitcoin’s Role in the Current International Crisis?
With the rest of the world in crisis, Bitcoin, Ethereum, and other cryptocurrencies have become an alternative to the global financial system that everyone is talking about. Not everyone is happy about the relatively easy access to cryptocurrency. US Senators have already asked Treasury Secretary Janet Yellen how to enforce those international sanctions on the cryptocurrency industry.
While a few crypto exchanges, including Binance and Coinbase, have voluntarily agreed to block some users and accounts, a more widespread and forced compliance approach isn’t likely to happen anytime soon. After all, even if crypto is the go-to for Russian oligarchs, it’s also been the source of millions in support of the Ukrainian people, government, and fighters.
While it’s not yet clear how the whole crypto war will play out, what’s clear is that crypto offers a haven where big money can flow. Indeed, in a time of crisis, it may be the only financial system you can rely on.