More Than Half Of Ukraine Weapons Suppliers Accept Crypto

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Now that the Russo-Ukrainian conflict has completed its first year, reports indicate that crypto has played an essential role in the dispute besides serving for donations. Based on revelations by Ukraine’s Deputy Digital Minister Alex Bornyakov, the country used crypto to pay for approximately 60% of the military equipment acquired for the war.

60% of military equipment suppliers for Ukraine accepted #crypto, claims ministerhttps://t.co/iRW5m4FHLg

— John Morgan (@johnmorganFL) February 24, 2023

Bornyakov made the revelations during a Friday interview with Yahoo Finance, noting that suppliers accepting to receive payments in digital assets enabled the switch to crypto to avoid inefficiencies and inadequacies associated with traditional finance. In his words:

If we used the traditional financial system, it was going to take days. <…> We were able to secure the purchase of vital items in no time at all via crypto, and what is amazing is that around 60% of suppliers were able to accept crypto, I didn’t expect this. <…> Companies manufacturing goods like bulletproof vests, helmets, and different kinds of optics, even they were able to receive crypto,”

Ukraine Cryptocurrency Donations

When the war began, Ukraine said it would receive donations in cryptocurrencies to help them fight the aggressor’s heavy military artillery. The global community came together to support the cause, with worldwide financial assistance accumulating over $60 million in crypto. In turn, Ukraine actively deployed the donated funds to purchase military infrastructure, amongst other basic necessities. The Deputy Digital Minister highlighted that different sources sent the support, including Russians. It is worth mentioning that the country would turn away contributions from blacklisted entities.

Donations to Ukraine have varied from one dollar to millions of dollars. <…> Crypto, in certain cases, offers an anonymous way to transfer money. We saw that some Russians were donating to us a significant sum. The Russian people who have donated have sent significant amounts of money.

After the crisis started, the country set up a donation fund, with Ukrainian officials publicly noting how the funds were used for transparency purposes. For example, in an August statement, Ukraine’s minister for Digital Transformation, Mykhailo Fedorov, detailed how the government had utilized some of the $54 million worth of funds raised through cryptocurrencies to acquire military gear.

With $54 M raised by @_AidForUkraine, we've supplied our defenders with military equipment, armor clothes, medicines and even vehicles. Thanks to the crypto community for support since the start of the full-scale invasion! Donation by donation to the big victory. Report below. pic.twitter.com/lifHAP8R4f

— Mykhailo Fedorov (@FedorovMykhailo) August 17, 2022

In the latest Twitter comment, Fedorov said, “A year ago, Russia thought Ukrainians would surrender. Kyiv will fall in 3 days. Instead, our people stopped tanks with bare hands, shamed occupiers in Kherson, adapted to live in blackouts, became volunteers & donated billions for Army. Country of heroes.”

Fedorov was taking orders from Ukraine’s Ministry of Defense, who asked him to manage the purchase of weapons through crypto. Accordingly, the Ukrainian government made agreements with Ukraine-based cryptocurrency exchange Kuna to create a beneficiary address for these donations, listing five signatories, two ministries, and other upper ranks in government.

Ukraine’s System Of Using Donated Cryptocurrencies

Spending approval required three out of the five signatories receiving cryptocurrency donations. The withdrawal system was set up in this way to allow access to funds even when one of the signatories became indisposed. The collaboration with local crypto exchange Kuna was also value-adding, given its technological capabilities to retrieve funds and perform transactions even in the absence of designated wallet holders.

Commenting about the system of using crypto donations, Ukraine’s Deputy Digital Minister Alex Bornyakov noted that the conflict threw Ukrainian residents into unexpected circumstances. Accordingly, it was a possibility that one of the signatories could find themselves in a harrowing situation that would cripple accessibility to the crypto wallet.

The Role Of Crypto During Times Of Conflict

It is worth mentioning, therefore, that the use of crypto to support Ukraine has underscored the potential future role of digital assets during times of conflict. The country leveraged the presence of many vendors who were open to on-ramp cryptocurrencies, which is a reflection of the abundance of traders that are open to selling goods and services in cryptocurrencies.

Noteworthy, the vendors were located in jurisdictions where cryptocurrency trading is allowed, which means they possess crypto accounts and can legally receive payments in Bitcoin (BTC) and many other altcoins.

According to Bornyakov, cryptocurrency transactions were more convenient than traditional payment modes. In a previous statement, he compared crypto performance to the SWIFT network on the basis of speed, simplicity, and convenience. In the comparison, crypto turned out to be the preferred option. For security reasons, the identity of the merchants linked to the wallets remains undisclosed.

UN Calls For Russia To Withdraw From Ukraine

In recent development, the United Nations called for Russia to withdraw its troops from Ukraine unconditionally. This came after a vote where the majority voted overwhelmingly in favor of the decision. The decision was made on Thursday night when out of the 180 member countries of the UN, 141 voted in favor, seven voted against, and 32 were absent.