Of note, cryptocurrencies have allowed for the by-passing of institutions that might not allow for payments to Ukraine. Given the fact that martial law has been implemented in Ukraine, bank activities have been suspended. However, cryptocurrencies are good for donations in times such as this since they allow individuals and organisations to directly support causes, cutting off means whereby corruption could thrive. Unlike countries that have banned cryptocurrency and blockchain-related activities, Ukraine had been working on the digitisation of governance (also recently seen with Salvador adopting Bitcoin as legal tender). Ukraine’s Ministry of Digital Transformation, which was established in 2020 and tasked with the advancement of Ukraine’s infotech industry, was recently charged with the procurement of needed equipment in the fight against Russia. The ministry is also charged with gathering cryptocurrency donations. Prior to this, every donation had passed through traditional payment channels. It wasn’t until February 26th, 2022, that the Ukrainian government began receiving crypto donations. The plea for donations was soon posted across different platforms starting from the deputy prime minister, Mykhalio Fedorov’s, Twitter to Ukraine’s Twitter account. Following the success of the donations, there has been a promise for future airdrops as a means to facilitate the long-term support of citizens and organisations worldwide. One can only but wonder what would have happened if Ukraine had taken an anti-blockchain stance as most countries have. Although, the donations received pale in comparison to the sum the US has donated (Biden recently demanded $10 billion authorisation from congress, after America had pledged $350 million) joining many other countries which have offered Ukraine support.

Source: Twitter

Insomuch as Putin’s Russia is the cause for the financial situation in Ukraine, it, too, has fallen onto hard times what with sanctions from a vast number of different countries now potentially beginning to cripple its economy. Sanctions usually work by powerful countries curating a list of important businesses and people its inhabitants must avoid having transactions with. Concerning, but ironic, is the fact that cryptocurrencies serve as a means of sanction evasion for Russia, not just as a means for raising donations for Ukraine. Two sides of the same coin and furthermore highlighting the concerns most have about cryptocurrencies. Habitually, in the global finance scene, banks would block transactions from persons under sanction or their business, as can be seen with the UK sanctioning Ibrahimović and what it has meant for Chelsea football club. Previously, the US and western countries had, in 2014, sanctioned Russia for its invasion of Crimea, the result of which was the swift economic change and the yearly loss of $50 billion. But Russia has not been idle since then. The emergence of cryptocurrencies and digital assets has presented a way potentially for it to evade sanctions. The US has been aware of these developments and warned that cryptocurrencies could pose a serious threat to its sanctions, stressing it had a lot more work to do in understanding how these digital assets can be used.

Blockchain, cryptocurrencies or any other technology or innovation are usually neutral, posing as docile tools. Whether technology is good or bad depends on its users. On the other hand, blockchain, when applied to tackle problems with international payments and finance related problems, can also be used to evade accountability, such as Russia is doing. Some of the reasons Blockchain technology and cryptocurrencies are being criticised are the same as the reasons for which they are being adopted. The US is already looking at regulating cryptocurrencies with a new executive order - all in a bid to stem how Russia is evading sanctions. Is there a way or scenario where blockchain enthusiasts and governments leave happy? Not yet. It is worth bearing in mind governments are usually reluctant to regulate technology.

It is worth remembering that technology is a tool in the hands of its wielder - technology is neither bad nor good. It is, after all, just technology.

For a while, Shopify, Canada’s retail giant and answer to Amazon, has enabled the merchants using its FinTech platform to accept cryptocurrencies. Shopify has even devised a simple guide for merchants to follow, explaining the advantages of using cryptos and how to get started so that it can offer cryptos as a payment option for their customers. The most valuable FinTech firm in Europe, Klarna (with over 90million customers), is rumoured to be preparing for an IPO in 2022 and has been a veritable leader when it comes to Buy Now Pay Later (BNPL). However, for now, it’s chief marketing officer, David Sandström, has said that Klarna “has no plans offer customers the option to pay using cryptocurrencies”. Sandström has gone on to say “Credit card companies have made an astounding amount of money by essentially cheating and taking advantage of people with bad terms and conditions, high rates and extremely disadvantageous interests. Roughly 70% of American millennials don’t have a credit card because they fear them more than they dread death, according to some reports.”

Furthermore, the main credit card providers such as Visa and Mastercard have shown a much more positive attitude towards cryptocurrencies. In an interview with Barron’s, Vasant Prabhu, Visa’s vice chairman and chief financial officer, said: “What we can do is be the bridge between the crypto economy and the fiat economy.” Indeed, both Mastercard and Visa now offer a wide range of debit cards that deal in crypto and can use their respective network of merchants globally. This is helping to onboard more people with digital wallets, currently reported to number almost 300 million people, with potentially 1 billion digital wallet holders by the end of 2022. Presumably, this excludes 20% of the population of China who have access to the Chinese CBDC have a digital wallet.

As we see more jurisdictions issuing their own CBDC payment platforms, there will potentially be the need for banks and FinTech firms worldwide to upgrade their processes and systems in order to accept digital currencies. Awareness of crypto and digital currencies is certainly growing and being fuelled by marketing and advertising campaigns, such as the 2022 Superbowl which attracted 112 million viewers. A 30-second advert cost $7m, a 27% increase on last year with the adverts being run by eToro, Coinbase and Crypto.com to promote their various crypto and digital assets products and services. During the Superbowl itself, FTX gave away $1million of Bitcoin as part of its marketing mix!

Source: Twitter

Certain jurisdictions are looking to overhaul their legislation and regulations, as was highlighted last November by Australia’s Treasurer, Josh Frydenberg: “For consumers, these changes will establish a regulatory framework to underpin their growing use of crypto assets and clarify the treatment of new payment methods.”  A common trait is that FinTech firms are making it simpler for users to buy and sell goods and services digitally, often bypassing the bank’s existing payments infrastructure. It is worth remembering the basic technology behind cryptocurrencies is likely to be the preferred choice for many CBDCs, and also for cash-backed stablecoins. Interestingly, such cash-backed stablecoins could prove to be popular for global corporations as a way to improve their ESG credentials and reduce the potential risk of leaving money on deposit at a bank as well as being exposed to the systemic risks of fractional banking. 

But this is an article for another day!