Sent Oct 13, 2022 4:30 PMUpdated October 14, 2022 at 4:59 pm
Could the war in Ukraine lead to a new bipolar, decentralized, or at least less dollar-centered monetary order? Russia is working on it, but the economic crisis it is going through limits its means and ambitions. It cannot be on all fronts. In the first half of the year, the flows of cryptocurrencies and bitcoin (19,960 euros) captured by Russia were 120 billion dollars, down 10% compared to the same period the year before. The war in Ukraine has not so far marked a massive “bitcoinization” of Russia. The decline in the prices of cryptocurrencies for 12 months does not favor their adoption as a safe haven. According to estimates, between 10% and 12% of the Russian population, or between 14 and 17 million people, hold bitcoin and cryptocurrencies.
“The cryptocurrency markets are not liquid enough for Russia to circumvent sanctions in a massive and systematic way,” Chainalysis believes. In the four months following the war in Ukraine, cryptocurrency flows to Russia reached $ 75 billion, according to the company. To avoid the freeze under sanctions, the Russians repatriated the bitcoins and cryptocurrencies they had left on the platforms from abroad. In early October, Europe closed the cryptocurrency market and sector to Russian residents. Prior to this tightening, they were allowed to have wallets or accounts on European crypto platforms but within the limit of € 10,000 per person.
Feared at the start of the war in Ukraine, the flight of capital from the oligarchs to bitcoin and cryptocurrencies did not happen or, at least, only on a small scale. At the beginning of the year, the fortunes of the top 20 oligarchs exceeded $ 350 billion. On two platforms, Binance, the world leader, and LocalBitcoins, which allows person-to-person transactions, the cumulative volumes between ruble and cryptocurrencies certainly jumped to 805 million dollars in March, but to return to the norm, between 100 and 400 million. dollars, over the next five months.
bitcoin anti-globalization currency
To recover money in countries deemed safe for them, the Russians have sold their bitcoins and cryptocurrencies in particular to Turkey, the United Arab Emirates (Dubai), Georgia and Kazakhstan. Cryptocurrency holders eager to recover money did well to act quickly. Since the Russian invasion of Ukraine on February 24, bitcoin and ethereum have lost half their value, and a sustained rebound seems unlikely in the current environment. An expert quoted by the analyst firm believes that in order to circumvent international sanctions, Russia has started on an even modest scale to regulate some cryptocurrency imports with countries like China and Iran, another pariah of international finance. . This use of cryptocurrencies as a means of payment partly explains the development of stable cryptocurrencies (“stablecoins”), whose fixed value is supported by a major currency. In Russia, the stablecoin market share of cryptocurrency traded volumes nearly doubled, from 40% to 75% between January and summer, far ahead of bitcoin (25%). In a loosely oriented cryptocurrency market, stablecoins are also popular with Russian investors for their liquidity and safe-haven image.
Paramilitary and humanitarian aid
Bitcoin and cryptocurrencies played a minor role in financing the war in Ukraine. A few million dollars in cryptocurrencies have been used to fund the activities of Russian paramilitary groups operating in Ukraine, according to a Wired article, along with data from other analytics firms such as Elliptic, TRM Labs, and competitor Binance. These are very modest sums compared to the hundreds of billions of dollars of the global cost of war (materials, human losses, impact on its economy, sanctions, etc.) for Russia. Every day it would have to spend about a billion to finance this conflict. Donations of cryptocurrencies are organized on social networks to finance the war in Ukraine (weapons, bulletproof vests, medicines, etc.). Russian personalities affected by sanctions are sometimes at the origin of these fundraisers. Humanitarian aid to Ukraine further benefited from the generosity of cryptocurrency holders with the equivalent of $ 60 million in donations through “Aid for Ukraine”.