Category: Russia

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Crypto News NFTs Russia

Ukraine Flag NFT Raises $6.75 Million to Fund War Efforts

An NFT of the Ukrainian flag has sold for 2,258 ether – about US$6.75 million – with the proceeds directed to ‘Come Back Alive’, an organisation that donates supplies to Ukrainian civilians and members of the military.

DAOs to the Rescue

The sale of the NFT was organised by UkraineDAO – a crowdfunding effort led by radical Russian art collective Pussy Riot and NFT token studio Trippy Labs to support Ukraine’s efforts against the Russian invasion. The bid that won the sale for the 1-of-1 flag was placed on behalf of a group of 3,271 donors via a service called Party Bid:

This is where the DAO (decentralised autonomous organisation) was able to purchase the NFT from itself through donations from its members. On February 27, Pussy Riot had already organised the DAO to raise money for Ukrainian soldiers facing down the Russian Army:

The project is taking cues from other politically minded fundraiser DAOs such as AssangeDAO and ConstitutionDAO. UkraineDAO joins the government itself in asking for crypto donations to aid the resistance against Russia.

Ukraine Turns to Crypto for Aid

Cryptocurrencies have been proving to be Ukraine’s financial saviour amid the turmoil the country is currently experiencing. The Ukrainian government recently succeeded in raising US$37 million in crypto after appealing to the public for assistance. The Ukrainian vice prime minister has also called on crypto exchanges to block Russian and Belarusian users from accessing their crypto accounts.

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Coinbase Crypto Exchange Crypto News Russia

Coinbase Refuses to Block All Russian Crypto Transactions

Coinbase has joined Coinberry, Kucoin, Binance and Kraken in refusing to “sabotage ordinary Russian users” by freezing their accounts at the request of Ukraine’s vice prime minister.

A Coinbase spokesperson said the digital currency platform would not “institute a blanket ban” against Russian users, adding that such a measure would “harm economic freedom”.

A unilateral and total ban would punish ordinary Russian citizens who are enduring historic currency destabilisation as a result of their government’s aggression against a democratic neighbour. We remain vigilant as this invasion evolves and are deeply committed to playing our part.

Coinbase spokesperson

“Instead, we will continue to implement all sanctions that have been imposed, including blocking accounts and transactions that may involve sanctioned individuals or entities,” the Coinbase representative added.

Majority Approves Exchanges’ Decision

Coinbase’s decision, along with those of the four other crypto exchanges that have declined to block all Russian crypto transactions, has been met with almost universal approval:

Of course, there’s always the exception that proves the rule:

The good news is that in the week since Russia’s military invasion of Ukraine began on February 24, as of March 1 over US$37 million in Bitcoin and other cryptocurrencies had been donated to the Ukrainian government and Ukraine-based non-governmental organisations (NGOs) to aid its resistance.

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Bitcoin Crypto News Russia

Bitcoin Surges 15% Overnight, Flippening the Russian Ruble

As conflict between Russia and the Ukraine intensified, it wasn’t clear whether bitcoin would act as the “risk-on” asset it has been in the past. However, as Russian citizens scramble to get their money out of ATMs after being cut off from the SWIFT system, geopolitical turmoil has seemingly done the improbable, causing bitcoin to surge by 15 percent overnight.

BTC/USD. Source: Coinbase

Bitcoin Flippens Russia’s Ruble

Since its invasion of Ukraine, Russia’s domestic currency, the ruble, has collapsed in dramatic fashion against the US dollar by some 30 percent.

Russian ruble/USD. Source: Yahoo Finance

As a result of bitcoin’s gains and the ruble’s precipitous downfall, bitcoin soon overtook the Russian ruble by market cap in a so-called “flippening”.

Bitcoin Now Risk-Off?

As markets shifted in a distinctly “risk-off” direction, equity futures were slammed. Curiously, however, bitcoin futures were up, suggesting that perhaps it doesn’t always trade as a high-risk technology stock.

Bitcoin futures amid a sea of red. Source: Simon Hayes

What’s Driving the Price Action?

The first, and most obvious, inference is that Russians are flocking to buy bitcoin in unprecedented volumes as they watch their local currency collapse. No doubt they are seeking refuge in a fixed-supply, decentralised, and unconfiscatable digital asset. This is reflected in BTC/Ruble trading volume figures:

BTC/Ruble trading volumes. Source: Kaiko

This is also supported by Glassnode data which illustrates that we’ve now reached an all-time high of non-zero BTC addresses:

A second argument that podcaster Natalie Brunell makes is that this crisis, together with Canada freezing bank accounts of protesters, serves only to raise the profile of Bitcoin as a permissionless, censorship-resistant, borderless form of money that you can custody yourself.

Bitcoin’s overnight rise, while unexpected to some, is viewed by others as an entirely logical consequence of a debt-backed fiat system beginning to fray at the edges. That said, the situation in Ukraine remains complex is evolving. Time will tell how Bitcoin responds in the coming weeks and months.

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Bitcoin Crypto News Russia

Russia Could Use Crypto to Evade Sanctions After Being Cut Off from SWIFT

Amid Vladimir Putin’s invasion of Ukraine, the US and EU have announced a plan to isolate Russia from the international financial system, including blocking some banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), the messaging networking underpinning global finance.

What is SWIFT and Why Does It Matter?

SWIFT is a global cooperative of financial institutions formed in 1973 when 239 banks from 15 countries came together to establish a way to handle cross-border payments. Today, SWIFT connects more than 11,000 financial institutions across more than 200 countries.

Best understood as a simple email system that enables secure messages across its members, SWIFT facilitates an average of 40 million messages a day including orders, payment confirmations, FX exchanges, and trades. Importantly, SWIFT doesn’t actually do any transfers or holding of funds, but it’s a critical part of the communication infrastructure that enables cross-border money flows. Think of it as a vital part of the global financial system’s plumbing.

Consequences of Being Cut Off SWIFT

While SWIFT isn’t a political organisation, it has often been used as a geopolitical tool as part of sanction packages. Cutting Russia out from the SWIFT system would prevent its access to some US$630 billion in central bank reserves and dramatically impact its ability to conduct global trade. This was highlighted by the EU Commission:

Cutting off Russia from SWIFT is, however, a genuine double-edged sword. The Federation remains a key energy producer for much of Europe and further abroad. It is therefore anticipated that sanctions would not apply to its energy sector.

At this point, it isn’t clear how this will play out. However, it is something Russia has no doubt long foreseen, given that it has been building an in-house system since 2014 specifically to handle situations like this.

Crypto to Get Around Swift

While nothing has been confirmed as yet, it’s self-evident that unlike SWIFT, cryptocurrencies are incapable of censorship, making them a perfect vehicle for circumventing sanctions.

The caveat, of course, is that they would need to be genuinely decentralised. For example, if the US discovered ETH was being used to circumvent sanctions, what are the chances of the Ethereum Foundation getting a call asking for Chainalysis-identified addresses to be banned?

Recognising the danger of decentralised digital assets, the European Central Bank has started moving at lightning speed to get its crypto regulatory framework in place:

In the end, it’s worth remembering that crypto is apolitical and neutral. Like knives, electricity, the internet or fists, it can be used by good and bad actors alike. Even though Cuba and North Korea have both used crypto to get around sanctions, it’s best to view assets such as Bitcoin as a neutral technology.

How this saga plays out, and whether this marks the beginning of the end for US dollar hegemony, remains to be seen.

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Crypto News Crypto Wallets Cryptocurrencies Russia

Ukraine Government Raises Over $37 Million in Crypto After Public Appeal

Since the start of Russia’s military invasion of Ukraine on February 24, over US$37 million in Bitcoin and other cryptocurrencies has been donated to the Ukrainian government and Ukraine-based non-governmental organisations (NGOs).

This figure is rising rapidly as donations continue to pour in from crypto users around the globe.

Ukraine has been fairly progressive in its approach to crypto, having officially legalised Bitcoin and other digital assets in 2021.

The official Twitter account of the Ukrainian government issued a request for crypto donations on February 27, including to its official Bitcoin, Ethereum and USDT (ERC-20) addresses. 

Initially there was some scepticism about the legitimacy of the request, with Ethereum founder Vitalik Buterin tweeting a warning – but it was later confirmed the addresses were under the direct control of the Ukrainian government. 

Analytics Show Most Donations Direct to Government

According to crypto analytics firm Elliptic, of the current donations, US$10.6 million has gone directly to the Ukrainian government from 13,670 individual transactions – including the donation of one NFT worth US$1.86 million, which was originally intended to raise funds for imprisoned Wikileaks founder Julian Assange.

The remainder of the donations have gone to NGOs, most notably Come Back Alive, which has received over US$6.5 million in Bitcoin and has come to rely more heavily on crypto donations following the suspension of its Patreon account due to funding military activity.

Crypto Shines During Conflict, Both Sides Could Benefit

Many in the community have noted the advantages crypto provides over more traditional payment systems during times of crisis. While Russia looks like it may be entirely cut off from the SWIFT network and Patreon suspends the accounts of NGOs, crypto donations continue to flow unabated:

Of course, crypto’s decentralised nature allows for funds to flow freely to both sides of the conflict and there’s still significant doubt and concern about how crypto might influence the course of this, and future, military conflicts.

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Regulation Russia

Russia Shifts from Banning to Regulating Crypto Like Foreign Currencies

Russia has decided to shift from banning cryptocurrencies to recognising them as a form of currency, according to local newspaper Kommersant.

As per the local report, the Russian government and the country’s central bank have decided to integrate cryptocurrencies into the same regulatory framework as for foreign currencies, thus becoming part of Russia’s financial system.

This new law would seek to put digital assets under state oversight with “strict obligations for all participants in the professional market and an emphasis on protecting the rights of ordinary investors”.

The decision comes not long after Russia’s central bank decided to fully ban digital assets, claiming that their speculative nature posed a threat to the financial stability of Russian citizens. This, however, was met with great opposition from the country’s finance ministry.

Banks Will Take Control of Crypto Transactions

The new law proposes a framework that will treat crypto as an “analogue of currencies”, and it’s expected to come into force by February 18.

First of all, citizens will only be able to buy crypto through “licensed and locally registered financial entities”. This means, of course, that local banks will work as intermediaries between users and crypto companies. It also means that users won’t have control of their funds.

Cryptocurrency exchanges, decentralised marketplaces and other related platforms will be forced to open a bank account to register as legal entities – as long as they meet certain conditions, such as having sufficient capital and liquidity.

Criminal Charges For Not Declaring Crypto Transactions Over $8000

Second of all, the Russian government could collect over US$13 billion as tax payments from this crypto law. All crypto transactions over 600,000 rubles (approximately US$8,000) must be declared to the Federal Taxation Service (FNS), or criminal charges will result.

Third, banks working with crypto exchanges won’t use blockchain analytics tools from security companies such as Elliptic or Chainalysis. Instead, they’ll be using the “Transparent Blockchain”, a tracking tool developed by Russia’s financial watchdog (Rosfinmonitoring).

The Transparent Blockchain is capable of identifying owners of crypto wallets and collecting information from the darknet, thus detecting illegal activity with the use of digital assets.

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Crypto News Cryptocurrencies Regulation Russia

12% of Crypto Market is Owned by Russian Citizens, Says Russian Government

Russian government authorities have revealed that the federation owns more than 16.5 trillion rubles, or US$214 billion worth of cryptocurrencies – controlling roughly 12 percent of the crypto market. 

Russians Own More Crypto Than Expected

According to sources within the Kremlin, the report was an estimate calculated by analysing IP addresses of some of the biggest crypto exchanges in the country. Russian authorities are using this estimate to form a better overview of the industry and implement proper regulations.

It’s unclear if this estimate is lower than the actual number of crypto users in the Russian federation, since a lot of them use anonymous tools to transact cryptocurrencies:

It is, however, a huge leap from December 2021 when it was reported that Russians held only 5 trillion rubles in crypto, or US$67 billion at that time.

Russia Finally Comes Out in Favour of Proper Crypto Regulation

The regulatory weather in Russia has been a quite confusing environment for crypto users. Two weeks ago, the Russian central bank attempted to ban crypto, only to be countered by the finance ministry with a crypto regulatory framework:

But after a bunch of back and forths between authorities, it seems Russia is finally preparing the roadmap for establishing proper crypto regulation, starting first drafts this month. Dmitry Chernyshenko, deputy chairman of the Russian Federation, last week signed a crypto regulation roadmap valid until the end of the year, as per a report from RBC.

Additionally, finance minister Anton Siluanov suggested that banks and other licensed financial entities should be allowed to provide crypto services, reiterating the ministry’s stance on regulating crypto rather than banning it.

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Banking Bitcoin CBDCs Crime Crypto News Investing Russia Scams

Russia Central Bank Moves to Ban Investment in Crypto

According to a report by Reuters, the Central Bank of the Russian Federation (CBR) is looking to ban crypto investments. In a directive issued earlier this week, the bank has also barred mutual funds from investing in digital currency.

Russia Rebels Against Crypto

The Russian Federation, which has long argued against cryptos – citing concerns of risks to financial stability, money laundering, and possible financial terrorism – has yet again spoken its mind.

After issuing concerns over the security implications associated with cryptos, the federation eventually gave them legal status in 2020 but banned their use as a means of payment. Following this, the central bank is now in talks with market players and experts regarding a possible overall ban on cryptos.

Should a ban be approved by lawmakers, it would apply to new purchases of crypto assets but not those made in the past. Russia’s current stance amounts to a “complete rejection” of all cryptos, a source close to the bank has said.

According to the bank, the annual volume of crypto transactions conducted by Russians amounts to about US$5 billion, with CBR first deputy governor Ksenia Yudaeva claiming the use of cryptos lowered the efficiency of monetary policy. According to Yudaeva, “The situation in developed market countries more and more resembles the so-called shadow financial system.”

CBR Seeks to Ban Mutual Funds from Investing in Crypto

Adding to the bad news for investors, Russia has issued a directive that prohibits Russian mutual funds from directly or indirectly investing in crypto assets.

According to the CBR, funds cannot invest in digital currencies or in “financial instruments, the value of which depends on the price of digital currencies”. The proposal issued by the CBR, in line with its hard stance on decentralised digital money, comes after the regulator urged stock exchanges to avoid trading securities tied to cryptocurrencies in July 2021.

Despite its firm stance against cryptos, Russia is currently working on a Ruble-backed central bank digital currency (CBDC). A pilot program was set for launch this month, but the deadline has been moved with a prototype expected to be created in “early 2022”.

Hacking a Cause of Concern for Russia

Hacking has become a hot topic in the crypto world as the incidence continues to rise. Of particular concern is the involvement of Russian-based hackers. In October, Google’s Threat Analysis Group (TAG) spent a good deal of time fending off hackers attacking the accounts of YouTubers to hijack and repurpose them to run ads for crypto scams. TAG had found that the perpetrators of the campaign were recruiting hackers from a “Russian-speaking forum”.

Last month, the US Department of Justice announced charges against a REvil ransomware affiliate responsible for the hack against the Kaseya MSP platform in which ransom demands totalled US$767 million. Law enforcement has also impounded an additional US$6.1 million from another REvil ransomware affiliate, Russian national Yevgeniy Polyanin, who remains at large.