Opinion: The Russian-Ukrainian war shows why crypto regulation is needed

Does the Ukraine war show that cryptocurrencies have an unprecedented critical role in humanitarian crises, or that they are completely untamable?

Shortly after Russia began its invasion of Ukraine, the Ukrainian government tweeted a request for funding in the form of BTC, ETH, and USDT. According to Michael Chobanian, founder of the Kyiv-based Kuna exchange and chairman of the Ukraine Blockchain Association, the total amount received so far has exceeded $60 million. Chobanian regularly updates the data via his Twitter account.

Unlike the aid pledged by governments around the world, the Ukrainian military has access to the funds in minutes instead of weeks.

For individuals, cryptocurrencies could offer a potential lifesaving escape from a crisis. A computer programmer from Lviv said he was able to escape the war thanks to bitcoin. With cash machines tightly restricted and long queues at banks, he was able to transfer all of his savings to Poland on the other side of the border. Now he is volunteering in Poland to help Ukraine win the digital war, fighting online propaganda and encouraging Russians to speak up.

However, Russians can move large sums of money quickly in the same way. As sanctions on the traditional economy intensify, oligarchs and ordinary people alike are finding new ways to move money and avoid mechanisms designed to cut Russia off from global money flows. Cryptocurrencies are part of that.

Is this the nature of beasts? Is the intrinsic value of cryptocurrencies neutral? Or, is there a way to combine the rapid digital liquidity of funds in extreme conditions that cryptocurrencies provide with the ability to impose restrictions?

an annoying question

Just asking this question would offend a significant portion of the crypto community. They would argue that the whole point of distributed ledger technology is that no central authority can exert and maintain control in a way that is consistent and morally acceptable to all. Morality – we live in a postmodern world – is relative. No one – including the world’s greatest philosophers – has come up with a satisfactory way to reconcile this moral disconnect. So we have cryptocurrencies, which are available to drug cartels, arms dealers and gangsters as well as charities trying to save lives in catastrophic situations.

One way to solve the problem of cryptocurrency value is to use closed user groups. We can create new crypto tokens and DAOs to operate them, embodying the values ​​of the founders and participants. For example, the Klima token embodies the belief that continued carbon emissions are disastrous for society and the planet. Its starting point is to push up the price of carbon offsets, and once carbon offsets are applied to a project, they can no longer be sold.

There are plenty of other cryptocurrencies with a completely neutral view on the Ukraine-Russia conflict. Nothing changes the principles by which these value-neutral tokens are created.

Cryptocurrency regulation is already having an impact

I believe there is more that can and should be done. As a European regulated financial institution, NexPay acts as a deposit gateway, enabling businesses to exchange digital assets such as crypto tokens for fiat currency and send them to bank accounts. This is because, in the real world, the vast majority of transactions are still conducted through fiat. Cryptocurrencies are maturing rapidly, but the total global cryptocurrency market is worth about $2 trillion, while the fiat economy is worth about $1,300 trillion.

Even though it’s been called the Wild West of the financial industry, we’ve seen how well regulated cryptocurrencies are in place. Anyone who has tried opening a crypto account knows that it is not an easy task and there are many regulatory hurdles to overcome.

Regulators have also been candid about the use of cryptocurrencies to evade sanctions in the current conflict. In the United States, a group of Democrats on the influential Senate Banking Committee sent a letter to Treasury Secretary Janet Yellen expressing concerns that cryptocurrencies could be used to evade sanctions. The U.K.’s Financial Conduct Authority (FCA) has contacted every crypto company registered with it to ensure they understand the sanctions and their responsibilities, and are monitoring the situation. Following Russia’s invasion of Ukraine, European Central Bank President Christine Lagarde called on the European Union to move forward with its crypto asset market (MiCA) regulation as soon as possible.

Regulators in some jurisdictions already have the power to place individuals such as Russian oligarchs on sanctions lists or lists of politically at-risk individuals, and businesses that fail to comply face hefty fines, severe reputational damage, and possible revocation of business licenses.

Whether due to these pressures or their own moral stances, many large cryptocurrency exchanges are now enforcing sanctions. But they resisted calls for a total ban, arguing it would hurt ordinary Russians. There is also a view that people will find other ways to break sanctions. Binance CEO Changpeng Zhao said: “If people want to avoid sanctions, there are always ways. You can do it with cash, with diamonds, with gold. I don’t think there is anything special about cryptocurrencies.” However, this This view ignores the digital nature of cryptocurrencies, which makes them easier and faster to move money than any traditional physical store of value.

Regulators have not won the war, far from it. But they are ramping up efforts to find ways to circumvent cryptocurrency sanctions. Our own experience tells me that regulatory scrutiny of crypto assets will only go in one direction.

A perfect system will never be created that both gets funds where they are needed and prevents them from being used by bad actors. This is simply because the world will never agree on who the bad actors are – take the difficulty the UN has had in reaching agreement in this regard, for example. However, in clear-cut situations like the illegal invasion of an independent country, we can and must continue to harness the power of cryptocurrencies coupled with proper regulation to help refugees rebuild their lives in their new homeland and stop money from flowing to those who appear to be geopolitical countries and peoples who plan to invade.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/opinion-the-russian-ukrainian-war-shows-why-crypto-regulation-is-needed/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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