The impromptu invasion of Russia on Ukraine has made headlines globally and has investors reevaluating their Cryptocurrency wallets and making big decisions regarding Cryptocurrency purchases and trades. Many falling privy to what experts are referring too as a "knee jerk reaction" to the added volatility of the already, hard to predict, Cryptocurrency market.
What's the invasion all about?
Tension between Russia and Ukraine has been heating up for some time now, starting with Ukraine declaring independency on August 24, 1991. The tension started heating up in February of 2014 as an aftermath to the Ukraine Revolution Of Dignity, which ultimately led to Russia's annexation of Crimea from Ukraine. The situation really came to a head not long ago in February 2022 due to the president of Russia (named Vladimir Putin) making the call to invade Ukraine. The invasion has sparked Europe's largest refugee crisis since World War 2, causing over 4 million Ukrainians to leave the country and an unclear number, but somewhere in the millions, more Ukrainians to be internally displaced. That's not to mention the casualties that have already resulted from this decision, even after just one day over 100 Ukrainians had been killed. While it may seem silly and dissociated to be thinking about investment during such a callous and malleus invasion the numbers have shown that people are definitely thinking about it!
What is the relevance between the Cryptocurrency market and the invasion/prospect of war.
Bitcoin dropped below $35,000 and Ethereum dropped significantly as well tipping the charts at $2400 and that is immediately after the invasion began. Investors are saying that this is relatively normal given the situation and the already unpredictable market, and think that many are just reacting to the situation and straying away from whatever their actual long term financial goals were to begin with. War and even just the invasion alone come with many financial implications that are sure to make investors concerned about where they've put their hard earned cash and what the possibility is of losing it.
Has the invasion caused the Cryptomarket to accelerate?
The short answer is absolutely! The invasion and the notion of a world war would have astronomical effects on the Cryptomarket. Crypto offers a digitized version of managing ones financial situation and offers a nearly instant solution for someone needing to transfer money. Given that the transfer can be done in quick, secure manner, that is just about as easy (if not easier in some aspects) as going through a traditional bank, the notion definitely appeals to citizens globally. A Crypto Token or Coin can be bought on either a centralized market OR a decentralized market, both options having different benefits and cons. Decentralized crypto ecosystem specifically, has paved the way for a more flexible way of surviving. It offers the means of a financial connection to other countries, the US for example, so that financial assistance is readily available, almost instantaneously actually.
Primarily the donations have been sent through Bitcoin and Ethereum, both of which are decentralized markets on the Blockchain. The Ukraine government has raked in close too sixty millions in donations already via Bitcoin, Ethereum. Donations are also being sent in the form of NON fungible tokens (NFT) as well as Stable coins, such as Tether. The immediate donations have come in handy in many different ways, aiding Ukraine in buying weapons etc. Not to mention the peace of mind knowing that when receiving funds they can be received with almost no turn around time.
Russia has been very boisterous about the fact that they do not support the use of digitized currency and the Cryptomarket alike. However it has been rumored that Russia may be turning to Cryptocurrency in order to receive financial assistance with energy exports such as oil and gas transactions, despite their negative opinions in the past regarding Crypto.
What is the new law passed in Ukraine legalizing Cryptocurrency?
Some of us remember President Volodymyr Zelensky's decision not to sign the same bill that he signed in February 2020, despite reservations that he clearly had just a few short months ago. The bill, known as “On Virtual Assets,” followed suit with the legalization of Cryptocurrency. In October Zelensky had some demands before agreeing to sign the bill. One of them being that the market should be regulated by Ukraine’s National Commission on Securities and the Stock Market. Evidently he got his wish because upon signing in Feb it was decided that the market would in fact be regulated by none other than the National Commission on Securities and the Stock Market. Not only is Crypto legalized but Banks will be setting up Crypto accounts for companies. This could pave the way for other countries (including the US) to do the same. It has been rumored that Belarus will potentially be implicating a similar law in that they will require exchanges to comply with KYC and AML stipulations.
So what the heck does that mean and what is the purpose?
In short the Virtual Assets law mandates that any and all exchanges adhere to the know-your-customer (KYC) and anti-,money laundering (AML) stipulations. Along with these regulations their will also be new licensing regulations required including obtaining licensure from the Ukraine's financial regulator, the National Securities and Stock Market Commission (NSSMC) as well as registering with the National Bank Of Ukraine (NBU).
The purpose of this law is to decrease/eliminate or prevent money laundering and terrorist financing, protect traders from fraudulent acts and mold Ukraine as a digitized economy. Not to mention also encourage citizens to use Cryptocurrency more frequently and stabilize and regulate the ecosystem as far as Cryptocurrency is concerned.
This legalization is huge as it is not just the legal trading of Cryptocurrency but also sparked the beginning of a new norm for managing finances in Ukraine. This law goes hand in hand with a new structure for banking and protocols that have adopted digitized banking and the blockchain as the new, innovative way of banking and sending money across the globe.
How could this law potentially have an impact globally?
- Difficulty for Russian citizens to buy/sell/exchange Crypto.
- Potentially Ukraine could see a drop in Crypto exchanges as well.
- Other countries may follow suit and set laws in place to ensure a more regulated and stable Crypto market.
- This could pave the way for digital currencies becoming the new and only way of banking thus having a negative impact on our planet due to the toxins that many blockchains put out.
- The potential of losing exchanges from both Russia and Ukraine could have a huge affect on pricing in the Cryptoworld.
What is the best move for those in the market right now?
When it comes to investors questioning what to do right now experts are simply saying do nothing. If you have a financial plan already mapped out, stick to it! Don't fall into the knee jerk reaction impulse to sell because the market seems to be dropping. Like with all fads, the market will rise and fall again many more times throughout this Crypto trend, that is where a persons patient is tested because it really is a waiting game. The Cryptocurrency market is very unpredictable and that's without a possible World War or say an invasion on Ukraine, so be patient and play the waiting game and stick to your plans!