Earlier this year Russia began its full-scale invasion of Ukraine, which caused global outrage and led to unprecedented actions by the U.S. government and European Union, including freezing Russia’s foreign currency reserves.
Russia’s invasion of Ukraine triggered a wave of voluntary bitcoin and crypto donations from individuals and charities. On the 26th of February, the Vice Prime Minister of Ukraine, Mykhailo Fedorov, tweeted: “Stand with the people of Ukraine. Now accepting cryptocurrency donations. Ethereum. Bitcoin and Tether.”
According to blockchain analyst Crystal, Ukraine has raised over $125 million in bitcoin and crypto donations as of May.
A large part of these donations came in at the beginning of the war. Daryna Antoniuk of “The Kyiv Independent” mentioned in a recent article that local charities aimed to spend the money as quickly as possible.
A large bulk of bitcoin and crypto donations were spent before the market began selling off. As of today, Aid for Ukraine has around $3 million left in its crypto wallets. Come Back Alive, another Ukrainian charity, has around $8 million and Unchain Fund nearly $73,000.
During the onset of the war, bitcoin and stablecoin donations were a much faster way of getting money into the hands of Ukrainian charities, as well as the Ukrainian government and military.
Final settlement of payments only takes 10 minutes using bitcoin, and sending stablecoins is significantly faster than using traditional finance rails. On top of this comes the censorship-resistant nature of bitcoin, which makes it an attractive tool for charities and organizations that want to raise money without the possibility of freezing their funds or halting transactions.
Viktor Kochetov, CEO of the cryptocurreny exchange Kyrrex, said that “war fatigue” and the recent bear market have led to a slowdown in bitcoin and crypto donations to the Ukrainian government and charities.
Despite the attractiveness of using bitcoin for donations, the majority of Ukrainian foreign aid has come through traditional finance rails, as would be expected at the current stage of bitcoin adoption.
Although bitcoin payment settlement is a lot faster than final settlement using the traditional banking system, a majority of governments, international organizations and high net worth individuals are more accustomed to using fiat currencies and the traditional banking system to send money abroad.
According to Forbes Ukraine, the country has received $16 billion worth of foreign aid and donations in total so far.
