More than $30 million in crypto donations have been sent to Ukraine since Russia invaded last week, according to blockchain analytics firm Elliptic.
The country has collected $33.8 million worth of crypto, Elliptic says, from nearly 30,000 donations. This includes a $5.8 million donation from Polkadot founder Gavin Wood, who offered to donate $5 million in DOT over the weekend if the government opened up Polkadot donations.
The fundraising efforts for Ukraine have ranged from almost $200,000 in Ethereum from the sale of a CryptoPunk NFT to $2 million from selling non-fungible tokens (NFTs) once designed to help Julian Assange.
Donations are flooding in from crypto-enthusiasts eager to illustrate the power of digital currencies to swiftly mobilize funds for emergency relief and circumvent the common problems linked to conventional banking systems during war, experts say.
"Through crypto, individuals around the world are empowered to provide relief to those who need it in the most in a transparent and accountable way," Mike Welsh, Director of Government Affairs at crypto risk and intelligence platform Merkle Science told The Street Crypto.
Justin Newton, CEO of technology provider Netki, told The Street Crypto that of all cryptocurrencies, Bitcoin was the most likely to be used as a sanctions evasion tool, "enabling countries like Russia to shield themselves from the pressure of international sanctions."
"This could include Bitcoin mining, which offers a potentially lucrative source of revenue that cannot be shut off by Western governments," Newton added.
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However, while crypto has become a potent fundraising tool for the Ukrainian government, former presidential nominee Hillary Clinton and senator Elizabeth Warren have vocalized concern about Russia's ability to sidestep sanctions through crypto.
Regulators “should look hard at how they can prevent the crypto markets from giving an escape hatch to Russia, both governmental and private transactions in and out of Russia,” Clinton said.
Others were less optimistic about Russia's capabilities via crypto.
"Building out a national Bitcoin mining infrastructure that could support the Russian economy as a whole would take years to do," Newton told The Street Crypto. "At the moment, crypto probably wouldn’t provide the necessary financial infrastructure for skirting sanctions at a large enough scale for supporting Russia’s economy."
“Using crypto to sidestep sanctions at any large scale will be difficult, though not impossible," added Jon Venverloh, COO of the cyber-infrastructure company Hypernet Labs that is helping build tools for a Web3 transition.
"Blockchain tracking capabilities are advanced enough that it would be relatively easy for the U.S. government to follow the money if the Russian oligarchs try to turn their fortunes into crypto," Venverloh told The Street Crypto.
Venverloh said that some digital currencies like stablecoins, which are pegged to fiat currency or other stable assets, could easily be shut off, making them ineffective as a channel to bypass sanctions.
"It’s still very much a question whether crypto will be effective in this regard, especially if it comes to large-scale transactions by governments, which only the largest exchanges have the liquidity to handle,” Venverloh said.