5 Key Crypto Talking Points from The Russia -Ukraine Invasion

6 min readApr 1, 2022

It’s a critical time for the world economy. For some it’s about who’s right or wrong

However one thing is sure:

Money will never be the same again.

In just about 24 hours, the russian central bank and russians lost access to 60 per cent of FX reserves, $388bn out of a total $643bn.They lost access to entire arrays of assets: securities and deposits in western central banks ($285bn) and in western central banks and brokerages ($135bn).

According to the Financial Times, The Russian central bank is left with $135bn worth of gold in it’s vaults, $84bn of chinese securities in renminbi, a $5bn position in the IMF and a residual $30 bn in actual cash, dollars and euros.

Here are 5 Key takeaways from the Russia -Ukraine saga that could impact on crypto as we have always known it..

  1. Crypto infrastructure isn’t as permission-less and decentralized promoted.

As the world started getting anxious in reaction to news of a possible war, economic sanctions, etc, people considered converting assets into crypto self-custody wallets like Metamask. Several people around the world noticed they could not access these services.

Opensea was also restricted in countries like Iran, Venezuela and some parts of Europe.

This brings to question the permissionless and decentralisation chants of crypto. Metamask has traced the issue to infura which happens to be the major ethereum node infrastructure powering their services.

In a tweet, Infura responded that these restrictions were as a result of US sanctions in certain locations.

Does it mean that The US can (to a large extent) restrict who uses Metamask? And if so, is it really permissionless?

Metamask and opensea control the lionshare of Defi & nft transactions and this is urgently begging for decentralisation.

2. Governments embrace crypto when they see how it benefits them.

The Ukrainian government has been able to raise over $100 million in crypto donations, this is more than 5 times the $20 million donated by the United Nations. Would this have been possible through traditional finance?

With this Ukraine is likely to see more support and adoption in cryptocurrencies having benefited largely from it.

Sources in the President Zelensky’s cabinet say “he shares our vision” that the use of crypto could be a “breakthrough from an economic standpoint” and that “we have the total support of the president at this point.”

Russia, on the other hand, seems to have been getting set for such a time, albeit quite poorly. A sizable chunk of her reserves have been converted into crypto prior to invasion.

Russia and her citizens own 12% of the world’s crypto assets, Estimated to be more than 200BN according to a study by Cambridge University.

Russia also accounts for about 14% of the total bitcoin hashrate.(third place) only behind Kazakhstan and the United States. (prior to the invasion).

Interestingly, The Russian government is reportedly exploring accepting payments in Bitcoin for Commodity and Oil and gas exports.

Governments and central banks could take a cue from this to strengthen their economic position in global finance.

3. Centralised exchanges are at the mercies of governments.

“Not your private keys, not your crypto”

is a common phrase in the crypto space.

In the aftermath of sanctions following Russia's acts, the US, UK, France, Germany, Italy, Canada, and the European Commission have collectively agreed to expel Russian banks from the SWIFT payments network, in an unprecedented act of global sanctions coordination.

This means that the target Russian banks have almost no ability to send or receive money outside of Russia, rendering them nearly useless as financial institutions.

Along with these also came calls from the Ukrainian government and the US asking major Centralized exchanges (CEXs) to freeze the assets of users in Russia.

The CEXs CEOs have been reluctant in executing, citing that a legal backing might be needed for this to be justifiable.

Jason Powell, Kraken CEO responded saying “@krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.

But he also adds that.

“Russians should be aware that such a requirement could be imminent.”

A Binance spokesperson also said. “Should the international community widen sanctions, we will apply those aggressively as well.”

This shows the risk associated with holding crypto in CEX, Although Russians still have access to their crypto, they’re just a legal ruling away from losing it all.

Centralised exchanges are almost as vulnerable as banks, they only make it easier for users to access crypto easily.

4. CBDCs still hold a substantial censorship risk.

Russia’s removal from the SWIFT network as well as pressure on CEXs to block Russian accounts, brings to the fore the risks of relying on any Government owned financial infrastructure.

While we could debate whether the action is fair or not diplomatically, it’s obvious that this censorship will be even easier with Central bank digital currencies (CBDCs.)

CBDCs replace the open decentralized blockchain with a permissioned, opaque ledger where all transactions are recorded and monitored by a centralized entity, usually the central bank.

This means that , at the push of a button, any asset owned by an entity in disagreement with the government can be frozen almost immediately, rightly or wrongly..

This is totally different from what Cryptocurrency powered by the blockchain stands for.

Truly, CBDCs are beneficial to the government in helping to manage Monetary policy, and taxes however these pros largely benefit the government and leaves little or no powers with the common man.

5. Dollarization of crypto is a ticking timebomb.

Russia has been badly hit by these sanctions no doubt and the aftermath of these sanctions would likely cause her to reconsider the use of the US dollar as the reserve currency of the world, a resolution that was first reached in the 1944 after the world war

The Bretton woods agreement resolved to peg all other currencies to the Dollar, then backed by gold .

However, when President Nixon took the US Dollar off gold in 1971 this signaled the end of commodity based money and weakened the dollar..

This has been followed by what might be termed as reckless printing of the dollar by the US Fed while leaving other countries to absorb some of the consequences.

For context- more than 50% of all the US dollar in circulation was printed in the last 2 years, just after the pandemic.

US dollar Stablecoins hold a sizable inflation risk also as they make up for over 70% of the stablecoin market and are pegged to the dollar on a 1:1 basis.

This means the failure of the major US stablecoin market could spell doom for the entire crypto economy.

Hence there is an urgent need for more decentralized, non-usd stable coins to step up in curtailing this as this war calls to question the current economic order.



As always, actions have consequences and recent events are a stress test to the crypto thesis as proposed by Satoshi and upheld by the crypto community, to develop a new system of money, on the blockchain, Open, decentralized and void of interference from any government or entity. It also presents a rare opportunity for the crypto space to re-evaluate certain normalised ideas whether they truly represent the economic sovereignty of the common man.

While we hope that the situation returns to normal and world peace is restored, it is important to employ these learnings to improve the crypto space and the world economy in extension.





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