Crypto for Control of Your Money
Would you consider it improper if the government froze your assets due to a contribution? What would you do if there were a run on banks and no cash was available and your credit card no longer worked? If there was inflation at 20% or 30% how would you protect your money?
Unfortunately, due to the wan in Ukraine, cryptocurrency has received attention because it proved to be a good way to move and store money when the banks closed, the ATMs have no cash, and to procure goods for the Ukrainian government. From the head of Blockain Ukrain’s Michael Chobanian to the Senate banking committee on how they are using the donations, “We receive money instantly, we can spend money instantly. We can attract donations from pretty much any place in the world, even countries which don’t have access to banking, but they have crypto.”
Why is Ukraine using crypto?
They are using it for the resistance, to buy provisions because it is easy to use, easy to transfer, and accepted by people all over the world. Ukraine has already received nearly $100 million dollars by allowing donations in the form of several different cryptocurrencies. Crypto has proved itself as a simple, efficient way to exchange value across borders, a decent replacement for cash, and a way to quickly raise funds globally. It is being used by the government to procure items needed for the war, and it is being used by the citizens of Uktraine as a tool for exchange and to take their money with them if they are fleeing to other nations. You can donate to the Ukraine’s efforts below via BTC, ETH, DOT, and many others.
Why are the Canadian truckers using crypto?
Can you imagine donating to a cause and because of a minor donation all your assets are frozen? For example, you donate $50 to a cause like the truckers movement or a BLM protest and your hard earned savings in your bank account is frozen. If you think that sounds ridiculous, that is what just happened in Canada a traditionally moderate and democratic country that just acted with no due process. Prime Minister Trudeae said this was an emergency, but it shows that if governments (including Western democracies) disagree with you and your money is being funneled through GoFundMe, on an exchange, or at a bank then it may be sanctioned or stopped for use if a corporation or government official deems your cause not in line with state or party goals.
The Canadian truckers started fundraising via GoFundMe, however, GoFundMe confiscated and blocked their funds and froze the associated bank accounts. After their bank accounts were frozen the Canadian truckers raised $1,000,000 in crypto to avoid sanctions, however, some exchange accounts were frozen and the funding via this method was stopped. But, there are still decentralized wallets and fundraising sources to get around these stoppages, and one simple way to avoid that is to have your own wallet and custody your own coins. Here is how one of the decentralized wallet providers replied after the Ontario Court of Justice ordered them to freeze and disclose information about assets used in the movement.
Why are citizens in Russia using crypto?
Normal Russians are using it to escape from the rouble and their stock market which have been decimated by the war and the sanctions from the West. To maintain their purchasing power and savings a flee to safety was a must. I wholeheartedly condemn the war in Ukraine, but I do feel for Russians who wanted nothing to do with this war, however, due to their leadership they will endure pain and suffering and potentially enormous financial losses. So, if it’s possible for them to exchange their roubles for another currency they are likely going to flee a direction that gives them control over their money and that helps them avoid inflation. That said, it makes crypto an easy choice.
Why are the normal Russians not banned? Simply, they are not the oligarchs named in the sanctions. Ukraine did ask that normal Russians be banned, however, the major crypto exchanges retorted with the following, “We are not preemptively banning all Russians from using Coinbase,” CEO Brian Armstrong tweeted March 3. “We believe everyone deserves access to basic financial services unless the law says otherwise.” And hours after getting Fedorov’s letter, a Binance spokesperson told CNBC, “We are not going to unilaterally freeze millions of innocent users’ accounts. Crypto is meant to provide greater financial freedom for people across the globe. To unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists.” The exchanges are following the original mission of many of the currencies, which is to provide a lifeline to those to protect their money in case of a disaster.
Can Russian oligarchs use crypto avoid sanctions?
Can Russian oligarchs use crypto to avoid sanctions? It is very unlikely and would be a very small scale if at all because there is not enough liquidity and there are very few on ramps that will do business with them. Additionally, there are very few ruble denominated crypto pairs, and the larger assets that have pairs are ones that have a public ledger. I know several senators, like Elizabeth Warren, have been opposed, but the people who are experts say things like the counselor to the deputy Treasury secretary Todd Conklin said, “The scale of what they have to move, and where they have to move things from, [crypto’s] not necessarily going to be that concerning”.
Once again, no exchanges will work with individuals who are sanctioned by the US. People think crypto exchanges still operate like the Wild West, however, similar to banks and other financial institutions the major players who have the liquidity for this kind of capital have robust compliance departments and know your customer (KYC) processes that make it very difficult for bad actors to operate in this manner.
So, how will they move the money, the experts speculate that it will be via the traditional methods. Other foreign currencies, shell companies, and shady banks may allow them move some of their capital around to avoid the sanctions from the West.
You can read more on this from the New Your Times, Head of Policy at the Blockchain Association Jake Chervinksy, and NBC. The Times does not mention crypto in Putin’s prep for being cutoff, and the other resources lay out why crypto is not a good way to move the volume of money that Russia and the oligarchs want to move.
Why are people in Latin America using crypto?
Inflation and devalutation of their currency. For example, people in Brazil cannot hold US dollars in their bank account, however, they can hold stablecoins without paying a foreign currency tax of (1% — 6%). The major exchanges are all looking to expand into this market, and regulation is coming in Brazil as it’s now creating meaningful waves for government officials. I found this data from Central Bank of Brazil particularly interesting, “as of August 2021 Brazilians held $50 billion in crypto, compared to $16 billion held in U.S. stocks”. So more Brazilians are fleeing to these assets each year, so much so that government is rapidly working on regulation to put guardrails to safeguard their citizens.
Below is from a previous story I wrote, but I think it fits here. Here is a quote from fxempire that does a good job of capturing this, “Turks make a million crypto transactions a day, Reuters reported last month. In Argentina, even the President has called crypto a “hard currency, somewhat,” with the power to “nullify inflation.” Another example is Rio de Janeiro, they recently allotted some of the annual budget to hold bitcoin in case of future inflation. If the experiment in El Salvador works, countries will be forced to follow because they do not want to get left behind, and it is increasingly likely that the citizens of [insert high inflation country] will choose to hold their money in a currency that does not erode their purchasing power.
What’s next?
There are many use cases cropping up all over the world that will inspire individuals to have absolute control of their money. Crypto is a tool to fight inflation, that provides freedom of your money and ability to support causes you believe in, and a life line if there has been a run on banks. The Bitcoin maximalists will tell you it is the best form of money ever created, and the more I am seeing with our world in turmoil the more I believe that maybe they are right. That it and stablecoins provide what people want.
Cheers,
Pivot_to_Crypto
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
