Cryptocurrencies back in limelight amidst Russia-Ukraine crisis
Cryptocurrencies are not only becoming a part of the global financial system but also a part of international conflict. In the wake of the ongoing Russia-Ukraine geopolitical turmoil, cryptocurrencies have become a prominent feature and can potentially emerge as an alternative payment mechanism, says GlobalData, a leading data, and analytics company.
Manish Dixit, Principal Disruptive Tech Analyst at GlobalData, says: “Cryptocurrency is politically unbiased and is gradually gaining traction. While the US Federation has emphasized the importance of regulation, events in the war-torn countries may act as a catalyst for cryptocurrencies. Following the ban of Russian banks from the SWIFT interbank settlement system, banks and oligarchs may use cryptocurrency as an alternate means of moving assets in and out of the country.”
After Ukrain’s appeal for cryptocurrency donations, more than $50m worth of cryptocurrency poured in. Ukraine also plans to mint NFTs to fund its military. Meanwhile cryptocurrency trading in Russia has soared as rouble continues to be battered by the sanctions aimed at constraining Russia’s economy and severing it from the global financial system.
GlobalData’s Disruptor Social Media Analytics Platform tracks online conversations of Twitter influencers and popular Reddit channels and allows to analyze in-depth all critical trends emerging on social platform.
Dixit continues: “Cryptocurrency-related conversation on Twitter after the start of the Russia-Ukraine conflict revolved around crypto trading of Russia and Ukraine, cryptocurrency donations raised by Ukraine, ban of Russia from SWIFT, sanctions on Russia due to invasion of Ukraine, and whether the use of cryptocurrencies help Russia to evade it.”
Mukesh Singh, Senior Disruptive Tech Analyst at GlobalData, says: “Ukraine citizens may benefit from cryptocurrency as they can convert their wealth into cryptocurrencies and curtail the risk of a banking system collapse. Similarly cryptocurrencies can help Russians to evade the crashing rouble.”
Rapid rouble inflation has adversely affected the Russian consumers, with the rouble hitting a 10-year low against the US dollar. This can enable the Russian consumers to turn to cryptocurrencies. Countries such as Iran have previously been accused of using cryptocurrencies to bypass sanctions.
Singh concludes: “The benefits that cryptocurrencies bring to the current conflict may pave the way for them to become more widely recognized. However, for cryptocurrencies to enter mainstream, countries across the world need to develop a global regulation standard.”