Crypto aid for Ukraine: innovation or just a sideshow?

NEW YORK (AP) — Ukraine, which has waged a staunch defense against Russian invasion, says it has pioneered a new source of financial support: People around the world who have donated millions of dollars directly to its war effort via cryptocurrencies such as bitcoin.

Since Feb. 26, when Ukrainian officials began tweeting calls for cryptocurrency donations, the Ukrainian government says it has taken in more than $60 million of its $200 million goal as of Wednesday. "Today, crypto is playing a significant role in Ukraine’s defense,” Alex Bornyakov, the country’s deputy minister for digital transformation, wrote on the nation’s donation website.

Ukraine has spent about $34 million of the funds received as of last week, converting about 80% to traditional currencies and using the remainder with merchants that already accept cryptocurrencies, Bornyakov said in response to emailed questions.

The funds raised in cryptocurrency are a just small part of the overall donations that Ukraine has received. After raising as much as $12 million on March 2, cryptocurrency donations have tapered off although boosters say the unexpected initial surge may inspire other efforts to solicit cryptocurrencies for humanitarian or defensive purposes. Officials have said that the speed with which they can use cryptocurrency donations has made them useful.

The downside of that ease of transfer, of course, is that cryptocurrencies continue to be a magnet for scams and are the currency of choice for criminal networks. On Tuesday, European Central Bank head Christine Lagarde warned that crypto assets “are being used as a way to try to circumvent the sanctions ” against Russia, but didn't provide details beyond noting that global transfers of rubles into cryptocurrency are rising sharply in volume.

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