The Crypto War according to the Russia - Ukraine Conflict’s Timeline

2022-03-15, 09:22

【TL; DR】

Since February this year, due to the tense situation between Russia and Ukraine, the global capital market has been occupied by risk aversion, the gold and US dollar indexes have risen, the price of crude oil has been increasing due to Russia's role in the conflict, and the risk assets are facing selling pressure.

[February 17] the Ukrainian parliament approved an amendment to the virtual assets law, officially recognizing the legitimacy of cryptocurrency in Ukraine.

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[February 21] the Russian Ministry of Finance submitted a regulatory bill to parliament to "conditionally" allow domestic cryptocurrency transactions.

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[February 26] the Ukrainian government announced the official donation address on Twitter, calling for encrypted donations in the form of BTC, ETH and USDT to assist Ukraine. As of March 4, the scale of cryptocurrency assistance obtained from the official address of Ukraine has reached US $50 million.

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[February 26] the United States, the European Union, the United Kingdom and Canada issued a joint statement, announcing that several Russian banks were prohibited from using the SWIFT international capital clearing system. Bitcoin in Russia has a positive premium of up to US $18000, driving the global Bitcoin price to rise by more than 15%.

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[March 1] CryptoPunk #5364 was donated to the Ethereum wallet of the Ukrainian government, worth nearly $200000. As a donor channel and fund-raising channel, NFTs has also played an increasingly important role in the conflict between Russia and Ukraine.

Since February 2022, the conflict between Russia and Ukraine has gradually intensified in tension, and finally evolved into a local war, which has had a huge impact on the global capital market. In a report on February 25, the Washington Post called the Russian Ukrainian war the "world's first crypto war". In this article, we will sort out the "crypto war" in the conflict between Russia and Ukraine in chronological order.

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Development timeline of Russia Ukraine conflict

The conflict between Russia and Ukraine did not suddenly break out in 2022, but has a long history. Ukraine is a member of the former Soviet Union and became independent after the disintegration of the Soviet Union in 1991. Although the country has become independent, it has always been divided in political opinion. Ukrainians represented by eastern Ukraine are mainly Pro Russian, while the rest are mainly Pro European. Subsequently, armed conflicts often broke out in eastern Ukraine and the Russian Ukrainian border. But this year's conflict is somewhat different from previous years.

Since February this year, the US government and media have repeatedly expressed their position on the conflict, believing that Russia is likely to launch a war at any time, and even given a clear time to invade Ukraine. Global capital markets are dominated by risk aversion, gold and the US dollar indexes rose, crude oil prices are also increasing due to Russia's role in the conflict, and risky assets are facing selling pressure.

Image: TradingView of gold and Bitcoin

On February 15, it was reported that some Russian troops withdrew from the Russian Ukrainian border. Meanwhile, the press secretary of the Russian president said that Putin was ready to start negotiations on the Ukrainian issue. Subsequently, the market tension eased, the prices of hedge assets such as gold fell in the short term, the stock market rebounded, and the cryptocurrency sector ,meme coins included, was also boosted. However, two days later, the armed conflict in Donbas resumed and the tension between Russia and Ukraine deteriorated again.

On February 17, the Ukrainian parliament approved the amendment to the virtual assets law by a 300:2. Overwhelming majority, which stipulated in detail the rights and obligations of service providers such as virtual currency exchanges, and officially recognized the legitimacy of cryptocurrency in Ukraine. The National Securities Commission (NSC) of Ukraine will be mainly responsible for the supervision of cryptocurrency, and the National Bank of Ukraine (UBN) will be responsible for monitoring the transfer of crypto assets.

In the same period, the Russian government is also discussing the compliance of cryptocurrency, hoping to promote the legalization of mining in specific fields, and actively carry out the domestic digital ruble platform test. On February 18, Anton Siluanov, Russian Finance Minister, said that the Russian government will approve a bill to regulate domestic cryptocurrency activities within this year, and launched a one month public opinion gathering. On the 21st, the Russian Ministry of Finance submitted a regulatory bill to parliament to "conditionally" allow domestic cryptocurrency transactions.

On February 22, Russian President Vladimir Putin signed a decree announcing the recognition of the two republics spontaneously established by civilian armed forces in eastern Ukraine, namely "Donetsk People's Republic" and "Lugansk People's Republic". At about 10:00 on February 24, Putin delivered a televised speech, announcing that he had authorized special military operations in the Donbas region of Ukraine, and the conflict between Russia and Ukraine officially escalated into a regional war. Bitcoin plummeted to $34655, which was its lowest level since February.

On February 25, the demand for cryptocurrency in Ukraine surged due to the Ukrainian government's restrictions on national cash withdrawal. According to CoinGecko data, after the war, the trading volume of Kuna, the Ukrainian encryption exchange, doubled, and the domestic USDT and BTC both showed different degrees of premium (5% and 7%).

On February 26, the Ukrainian government announced the official donation address on Twitter and called for encrypted donations in the form of BTC, ETH and USDT to assist Ukraine. Subsequently, the Ukrainian government announced the donation addresses of virtual currencies such as DOGE and Polkadot. Previously, a number of institutions in Ukraine, including Come Back Alive, Ukrainian Cyber Alliance and UkraineDAO created by former Russian band members, have received assistance in the form of cryptocurrency. Since February, encrypted donations to NGOs and volunteer groups in Ukraine have surged. As of February 27, the Ukrainian government raised cryptocurrency donations worth more than $10 million.

After the conflict between Russia and Ukraine escalated into war, the European Union and the United States implemented a package of sanctions against Russia. On February 26, the United States, the European Union, the United Kingdom and Canada issued a joint statement announcing that several Russian banks were prohibited from using the SWIFT international capital clearing system. On March 1, the US Treasury Department announced a ban on providing digital currency trading services to entities in Russia and asked a number of exchanges to block Russian users because it was worried that Russia would evade sanctions through encrypted goods and the sanctions against Russia also spread to the field of crypto currency. Subsequently, Bitcoin in Russia showed a positive premium of up to US $18000, driving the global Bitcoin price to rise by more than 15%, up to US $44000. Since then, South Korea, Japan and other countries have also joined the crypto sanctions against Russia. Due to the failure of the existing international payment system, the Russian rich can only buy more Bitcoin.

Image: elliptic.co

On March 1, CryptoPunk #5364 was donated to the Ethereum wallet of the Ukrainian government, worth nearly $200000. As a donor channel and fund-raising channel, NFTs have also played an increasingly important role in the conflict between Russia and Ukraine. On March 3, the Deputy Prime Minister of Ukraine announced that the government would launch the NFT series to support the Ukrainian armed forces. On March 4, according to the vice president of Ukraine, the scale of cryptocurrency assistance obtained from the official address of Ukraine has reached US $50 million.

Image: Twitter@RaritySniperNFT

On March 7, the Ukrainian delegation arrived in Belarus for formal talks with the Russian authorities. Up to now, the conflict between Russia and Ukraine has not been resolved, and the negotiations are still in progress. In addition, it is reported that on March 14, the talks between Russia and Ukraine will enter the fourth round, and the two sides are still negotiating on specific matters.

Conclusion

In this Russian-Ukrainian conflict, the cryptocurrency represented by Bitcoin shows dual attributes. On the one hand, Bitcoin is closer to risky assets rather than safe haven assets in the face of geopolitical conflicts. On the other hand, compared with traditional risky assets, cryptocurrency has better availability when traditional financial means fail, which makes the demand for cryptocurrency soar in conflict areas. In addition, new formats in the field of encryption such as NFT have also begun to play a role and become a novel way of financial assistance.

We will continue to keep an eye on the following updates of the conflict between Russia and Ukraine.

Author: Gate.io Observer: Edward H. Translator: Joy Z.
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