Cryptocurrency crash devalues Ukraine's government crypto fundraise


FILE PHOTO: Representations of virtual cryptocurrencies are placed on U.S. Dollar banknotes in this illustration taken November 28, 2021. REUTERS/Dado Ruvic/Illustration/File Photo/File Photo

LONDON (Reuters) - Ukraine, battered by three months of war, plans to continue to tap crypto investors to help raise funds after a plunge in prices decimated the country’s fundraising efforts in May.

Following the Russian invasion of Ukraine on Feb. 24, the Ukrainian government used social media to ask for cryptocurrency donations. Ukraine's Vice Prime Minister Mykhailo Fedorov this week at the World Economic Forum in Davos.

On March 19, the government's it had raised more than $60 million worth of cryptocurrency. But two months later, on May 19, the total raised was worth $51.5 million, Ukraine's deputy minister for digital transformation Alex Bornyakov said.

Cryptocurrencies have fallen sharply 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 the highly volatile assets.

All the funds raised in the "Aid for Ukraine" fund were stored in cryptocurrency but the government was able to spend $45 million of it on equipment for Ukraine's army before the crash, Bornyakov said in written responses to Reuters questions.

Ukraine has been funding its war effort in part with cryptocurrencies. The year before the war saw a rise in bitcoin donations to Ukrainian volunteer groups, some of which supplied equipment to government forces.

While crypto may provide some much-needed funds, Kiev estimated it needs $15 billion over the next three months to help its war-torn economy recover.

NFTS FOR WATER

Despite the volatility, crypto assets still appeal to Ukrainians seeking to raise funds.

Ukraine's largest independent beer brand, Obolon, plans to sell non-fungible tokens (NFTs) to help it distribute free water for humanitarian aid.

It is following the lead of Ukraine's Ministry of Digital Transformation, which has raised 286 ether (around $550,000) with its online "Museum of War" NFT collection.

Obolon plans to sell 5,000 NFTs for 0.1 ether (around $200), which can be exchanged for a commemorative beer bottle after the war.

"This project is directly to help us continue to scale, because today the financial situation in the company is difficult because in Ukraine the economic situation is very difficult," Olexander Chub, Obolon's director of foreign trade, said in a video interview.

Graphic: Bitcoin so far in 2022 - https://fingfx.thomsonreuters.com/gfx/mkt/xmvjoxbngpr/Bitcoin.png

(Reporting by Elizabeth Howcroft; Editing by Chizu Nomiyama)

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

   

Next In Tech News

India plans safety rating system for passenger cars
Why several calculator apps on your partner’s phone could be cause for suspicion
Your USB-C cable can charge your phone plus many other things too
Wrist-worn health trackers could spot Covid-19 before symptoms appear
5G yet to be adopted by vast majority of phone users, research shows
‘Diablo Immortal’: Hack-and-slash fun for patient mobile gamers
Telegram launches paid subscriptions for users who want more features
U.S. crypto firm Harmony hit by $100 million heist
Apple ready to bargain with its first U.S. store to unionize: source
U.S. tech industry frets about handing data to states prosecuting abortion

Others Also Read