It is a sunny spring day and the air raid alarm is now silent. This means that the new Russian missiles are not yet flying towards the small town in Western Ukraine where I am writing these lines. So let me think a little bit about an idea that struck me a couple of days ago. Why doesn’t Ukraine start its own cryptocurrency?
War in Ukraine has shown that cryptocurrencies play a vital role in the world economy today. Now it’s time to talk about new opportunities. Why not Ukraine start its own cryptocurrency?
The Russian invasion of Ukraine brought misery and grief to millions of Ukrainians. And it also destroyed the Ukrainian economy. In the dreadful circumstances of the ongoing war and economical crisis Ukrainians found a tool that helps to get by. It’s crypto.
More than 3 million of Ukrainians fled abroad, leaving their relatives in the country under bombings. Crypto proved to be the most convenient way to transfer assets abroad. And also – to keep their savings as the government ceased the foreign currencies turnover in the country. At least in the legal field.
Ukrainians quickly learned how to use hryvnia – the national currency that’s depreciating rapidly – to buy stablecoins (mainly, Tether). Pegged to the US dollar, the stablecoins help make sure your savings are, well, safe.
And you can transfer them to your family abroad within seconds. No extortionate fees included, by the way.
In the meantime, Ukrainian officials were extremely successful asking for crypto donations for the army needs. More than $100 million in crypto has been received by Ukraine already. The Ukrainian government officially operates with crypto wallets for BTC, ETH, USDT and even DOT. And in March, amidst the war with Russia, Ukraine officially legalized cryptocurrencies.
Many experts see all this as a clear sign that Ukraine, being one of the most crypto oriented countries prior to war, afterwards can become a true leader of the crypto world.
In this regard, let me speculate about whether Ukraine can take another decisive step in the direction indicated above and create its own cryptocurrency.
Ukraine is leading in terms of crypto adoption
It might sound strange, but Ukrainians have been accepting the idea of cryptocurrencies at a much faster rate than, say, Americans or Germans.
Data from Triple A shows that Ukraine is the world leader by percentage of population who own cryptocurrency.
Right before the Russian invasion at least 5 million of Ukrainians owned some crypto. That’s a whopping 12% of the population (before the war, of course).
Only 8% of Americans own crypto, the same data shows. And there are no European countries in TOP 10 of this list. It’s funny, but even citizens of Kenia, Nigeria, Columbia and Vietnam buy and use more crypto than citizens of the European Union.
Let me get this straight. Ukrainians are so brave to explore the mysterious waters of crypto, that they definitely own a right to be the first nation to get its own full scale cryptocurrency. They will surely know what to do with it.
How Ukraine embraced cryptocurrency in response to war
Young techno-natives helped the Ukrainian government raise over $100 million in crypto donations during the war.
How is that possible?
When Ukraine’s digital transformation minister Mykhailo Fedorov decided to set up official government wallets that could accept payments in cryptocurrency, it sounded like a joke.
It was the second day of the Russian invasion. The queues built up outside cashpoints and supermarkets in Kyiv, people were desperate to take care of their savings. The Ukrainian state desperately needed money to buy ammo and fuel to resist Russian invasion. The country was running out of supplies. There was an utter need for ways to pay to foreign suppliers.
The very problem was that even if the government had fiat money to pay abroad, the wire charges – usually taking days – were not fast enough.
In the crypto world, even huge transfers usually take minutes.
A month later it is obvious the Ministry of digital transformation does not eat its bread in vain.
How Ukraine legalized cryptocurrency amidst the war
On March 16 President of Ukraine Volodymyr Zelensky signed a crypto legalization law.
After passing the law, foreign and Ukrainian cryptocurrency exchanges can operate legally. Ukrainian banks can open accounts for crypto companies.
Now the National Bank of Ukraine will control the turnover of virtual assets secured by currency values. And the National Securities and Stock Market Commission will supervise other virtual assets, including securities and derivative financial instruments.
Investments in virtual assets are now protected by law.
And the Ukrainian government guarantees judicial protection of virtual assets rights.
That kind of legislation makes Ukraine one of the leading countries in terms of adopting cryptocurrency.
Such a leap of faith in the middle of war with missiles hitting Ukrainian cities at nights and millions of refugees fleeing abroad. That’s impressive.
Ukraine has shown a strong belief in crypto.
The war changed our perception of cryptocurrencies. And we owe it to Ukraine.
Ukraine is looking for ways to recover its economy after war
The war will not last forever.
As I am writing these lines (under the next air raid alarm, by the way), Ukrainians are actively discussing the possible peace treaty with Russia.
No doubt peace will be made.
The Russian aggression will be stopped, and troops will withdraw.
The overall damage from military operations in Ukraine is estimated at $500 billion. And this is a preliminary assessment of the situation.
Western countries have already pledged comprehensive economic assistance. And such assistance will come, there is no doubt about that.
But can you imagine what part of it could be in cryptocurrency and how would that fact help further adoption of cryptocurrency in the country that already has a corresponding legislation?
And how easier could it be if Ukraine had its own cryptocurrency? For instance, such a digital hryvnia could be pegged to the Euro or the US dollar. And thus be a link between stable foreign fiat money and a stagnating Ukrainian hryvnia – and there is no doubt hryvnia will be in big trouble as the economy if already effectively ruined.
Ukraine could boost its economy by gaining a crypto momentum
Cryptocurrency is on the rise now. No doubt about that.
More and more investments are coming to the crypto sector. Private investors and financial institutions don’t want to stay on the sidewalk and let the roaring crypto express run past them.
Why can’t Ukraine take advantage of the situation?
Imagine this – a ruined country will receive colossal investments and most of them will come with the expectation of a return on profits. Launching Ukrainian own cryptocurrency with some kind of airdrop in advance will be a simple yet effective way to raise assets and give something in return without actually paying fiat money.
If investors believe in the prospects of a recovered Ukrainian economy – and nothing indicates otherwise yet – they will be eager to get hold of some new cryptocurrency that is expected to gain some value in the future.
There were examples of countries selling out their state bonds ahead of expected economic recovery. Now crypto is the most effective way of doing so. It will let anybody become an investor of the recovering Ukraine.
And by anybody I mean not only states and large financial institutions, but also private citizens. Take a look at all those guys trading at crypto exchanges all night long. All those three or four letter names of different tokens mean nothing but the opportunity of profit to them.
Give them some kind of UAHD – or whatever the Ukrainian state crypto will be called – and they will be happily trading it too, thus investing into the Ukrainian economy.
Another air raid is canceled now. I’ll finish writing now and go for a walk. It’s a sunny day. The sky is blue and bright. Just as the future of Ukraine, I believe.
Sources: Triple A, Financial Times
