Crypto as a Lifeline: How Digital Assets Help Ukrainians Navigate Financial Chaos Amid War
Cryptocurrencies have offered a safety net to people living in contexts of war, displacement, and economic duress. In countries like Ukraine, the accessibility, low transaction costs, and lack of intermediaries associated with digital assets have given citizens a measure of control over their finances since the start of the Russian invasion.
BeInCrypto spoke with representatives from Hacken, Rewump, Grassroots Economics, and Namada & Anoma on the challenges displaced populations face in accessing traditional financial services and how digital assets can act as a lifeline.
How Did War Cripple Access to Traditional Finance for Ukrainians?Since Russia invaded Ukraine in February 2022, Ukrainians’ access to financial services has been extremely limited. Many bank branches were forced to close due to security concerns, damage, or the inability of staff to reach work. Ukraine’s national bank imposed limits on cash withdrawals at ATMs.
Russian strikes have purposefully targeted the country’s electricity grid, leaving Ukrainians in the dark and without access to a stable internet connection. The nation has grown accustomed to regular outages, which limit access to mobile banking and heighten reliance on cash.
“When war erupts, it’s not just physical infrastructure that collapses—electricity goes out, cities are occupied, and daily life grinds to a halt. In times of extreme uncertainty, panic sets in. People rush to ATMs, desperate to withdraw cash,” Dyma Budorin, CEO & co-founder at Hacken, a cybersecurity company with Ukrainian roots, told BeInCrypto.
Obligated by dire circumstances and the need to adapt, Ukrainians sought other alternatives to maintain some degree of financial autonomy. Many of them found the answer in cryptocurrency.
“Digital assets like liquidity pools for communities and on-chain mutual aid networks allow for trustless peer-to-peer transactions in war-torn countries where traditional institutions might no longer be accessible or even operating. They’re also a great alternative to fiat since the local currency of countries in conflict often experience hyperinflation, and aid or remittance payments rely on centralized institutions which may be unstable or politically controlled,” said Will Ruddick, founder of Grassroots Economics Foundation.
Although Ukraine was a leader in digital asset adoption before the war, its usage has proliferated since 2022.
Crypto’s Role in Funding Ukrainian Aid EffortsSince the start of the war, pro-Ukrainian causes have leveraged blockchain technology as a fundraising method for donations. According to an Elliptic report, they have since raised over $212.1 million in cryptoassets, predominantly donations to official Ukrainian government wallets. By the fourth day of the war, around $30 million was already raised.
“The crypto industry rallied around Ukraine, offering new ways to directly contribute to relief efforts and support the government. From medical aid and civilian relief to defense equipment, these funds have been hugely supportive in Ukraine’s time of crisis,” Ruddick said.
Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) have emerged as significant tools in facilitating cryptocurrency fundraising efforts for Ukraine.
According to Elliptic, these novel technologies have collectively raised over $78 million in donations to support the country. NFT campaigns have played a substantial role in this broader effort, accounting for approximately 10% of the funds raised.
“Blockchain infrastructure provides the most powerful channel for high-value single donations. Vitalik Buterin contributed at least $5 million, Gavin Wood donated $5.8 million. Moreover, UkraineDAO’s NFT sale of the national flag raised $6.75 million,” Budorin added.
Meanwhile, cryptoassets have also provided displaced Ukrainians with significant financial flexibility.
What Financial Hurdles Do Displaced Ukrainians Face?According to data from the UN Refugee Agency (UNHCR), nearly 7 million refugees have fled Ukraine since the start of the war. Meanwhile, around 3.7 million Ukrainians have been internally displaced.
Sergii Malomuzh, founder of Rewump, explained that displaced individuals face multiple obstacles in accessing traditional financial services. These include the loss of crucial identification, the inability to conduct transactions abroad due to a lack of local banking, high international transfer fees, and the instability of their national currencies.
“Digital assets can help address these challenges by providing access to financial services without needing physical documents, being unaffected by geographical restrictions, offering lower costs for international transfers, and enabling operations without depending on banks. They also act as a way to preserve value through stablecoins,” Malomuzh told BeInCrypto.
While cash is another option, carrying one’s life savings in physical form makes refugees vulnerable targets.
Digital vs. Physical CashBeyond the impracticality of refugees carrying large sums of cash, the security offered by digital assets has quickly become a vital advantage for those forced to flee their homes.
“For refugees, carrying cash across borders was not only impractical but also dangerous, as they were already a vulnerable population at risk of theft, loss, or exploitation. Having their savings in digital form provided a safer alternative, allowing them to securely access and transport funds without the risks associated with physical cash,” Budorin said.
The ability of digital assets to bypass traditional banking hurdles directly translates into the speed and efficiency required in the often fast-moving circumstances of displacement.
“Additionally, digital assets allow financial transactions to happen without relying on banks, which is crucial in these situations. Their low transaction fees and high liquidity also make them user-friendly. The decentralized nature of cryptocurrencies means that funds can be sent rapidly to areas affected by conflict or disaster, bypassing the slowdowns common in traditional financial systems. This empowers people to maintain control over their finances, even in situations where banks may fail,” Malomuzh added.
However, even with the numerous advantages of crypto in war-torn conditions, significant risks and challenges warrant consideration.
What Are the Privacy Risks?Adrian Brink, co-founder of Namada & Anoma, highlighted the distinct difference between anonymous and pseudonymous privacy features. While the former refers to a real-world identity that is completely unknown, the latter alludes to an identity that is not directly revealed.
“A big risk is that people adopt cryptocurrencies without understanding the tradeoffs, privacy being a huge one, where people think that these systems are anonymous when they’re really not. Especially in places where you can’t trust the ruling state or when adversaries are monitoring networks to target the opposition,” Brink told BeInCrypto.
Most popular cryptocurrencies, like Bitcoin and Ethereum, are pseudonymous. All transactions associated with a user’s wallet address are permanently recorded on the blockchain. While the user’s name isn’t directly apparent, various methods can eventually link activity back to their real identity.
“The lack of privacy with public blockchains is a significant issue. The ability to connect people’s identity to crypto donations opens them up to surveillance and can actually put people’s lives in danger. We urgently need the ability to protect people’s sensitive data when using blockchains,” Brink added.
These risks are amplified when entire populations are under siege, potentially leading to repercussions against political opponents or specific targets.
“People’s lives can be at risk when their identities can be linked with their on-chain activity, so we really need to see adoption and awareness of privacy-preserving systems. Education will be key here,” Brink concluded.
Ultimately, a focused global effort to understand, address, and effectively mitigate the inherent privacy risks within blockchain networks will unlock the future potential of digital assets to deliver even greater financial resilience for conflict-affected populations.
Overcoming these privacy concerns will make digital assets an even more powerful tool in contexts of war and human displacement.
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