Cryptocurrency crash reduces the value of Ukrainian government funding

After the attack of Russia entered Ukraine on February 24, the Ukrainian government used social media to request crypto donations. However, cryptocurrencies fell in 2022 as rising inflation and interest rates, war in Ukraine, and economic downturn in China led investors to abandon assets deemed high risk.

But they suffered a brutal crisis in early May, after the stablecoin terra lost its peg to the US dollar and collapsed into a “spiral of death”. It is the volatile route of crypto that has recently affected Ukraine’s fundraising efforts, leading the country to attempt to rally the crypto community to raise more donations.

After using social media to garner support, Ukraine’s Deputy Prime Minister and Minister of Digital Transformation Mykhailo Fedorov recently sought to attract crypto investors this week at the World Economic Forum. world in Davos: “Come back, Invest in peace, brothers and sisters” to appeal to the crypto community for more support, he said via a video at the Forum meeting in Switzerland.

As of March 19, the government’s “Aid to Ukraine” fund says it has raised more than $60 million in cryptocurrency. But two months later, as of May 19, the total amount raised is worth only $51.5 million, Ukraine’s Deputy Minister of Digital Transformation Alex Bornyakov said in a statement.

Naturally, the value of cryptocurrencies has plummeted in recent weeks. Bitcoin has lost more than 20% of its price so far in May, following a 17% drop in April, highlighting the risks faced by holders of this highly volatile asset.

Bornyakov said all the money raised in the “Aid to Ukraine” fund was stored in cryptocurrency, but the government spent $45 million of it on arming the Ukrainian army before the crash. Cryptocurrency value occurs, Bornyakov said in a written response to questions from Reuters news agency.

However, despite the volatility, crypto assets still attract Ukrainians looking to raise capital. Just recently, Ukraine’s largest independent beer brand, Obolon, plans to sell non-fungible tokens (NFTs) to help distribute free water for humanitarian aid, following the lead of the ministry. Digital Transformation Ukraine, they raised 286 ether (approximately $550,000) with their online “War Museum” NFT collection.

“This project directly helps us to continue to expand, because today the company’s financial situation is very difficult in Ukraine,” said Olexander Chub, Obolon’s director of foreign trade. in a video interview.

Ukrainian Minister Mykhailo Fedorov “Thanks for Cryptocurrency” on Easter Day

Aid to Ukraine has become a source of support to rebuild Ukraine from the tensions of war. Mykhailo Fedorov, Deputy Prime Minister and Minister of Digital Transformation of Ukraine shared his thanks on Twitter with the caption “Cryptocurrency is a good thing” on Easter on April 18. .

With the help of crypto exchange FTX, staking platform Everstake and Ukrainian exchange Kuna, Digital Transformation Ukraine has launched the official website “Aid For Ukraine”. ) to raise funds in crypto. This initiative is helping units defend Mykolaiv territory with a Ford Ranger Pickup or armed forces with a Pulsar thermal camera, and military clothing, and currently other donations are used to support the military. frontline with ballistic plate technology as bulletproof vest.

“The better equipped soldiers,” Fedorov wrote, “the sooner the day of Ukraine’s victory will come.”

The country was quick to adopt crypto as Volodymyr Zelenskyy, the President of Ukraine also recognized the power of the decentralized economy. He enforced the “Virtual Property Law” and legalized cryptocurrencies in the country.

While cryptocurrencies can provide some much-needed funding, Ukraine estimates it needs $15 billion over the next three months to help its war-torn economy recover. Ukrainian Prime Minister Denys Shmyhal said: “Ukraine defends the entire civilized world. The support of our partners will accelerate our victory,” he wrote on Twitter. “Despite Russia’s efforts to destroy our economy, we will win together!”

In a separate statement, the government said Ukrainian Prime Minister Denys Shmyhal was also seeking additional financial aid to cover Ukraine’s monthly budget deficit of about $5 billion.

“We need at least $15 billion over the next three months to cover these needs. For us, this is just as important as the weapons you provide against Russian aggression,” the statement said. I quoted Mr. Shmyhal. He also welcomed the European Commission’s proposal to provide Ukraine with 9 billion euros ($9.51 billion) in macroeconomic support.