Ukraine’s vice-prime minister Mykhailo Fedorov announced on Thursday that the country will begin minting non-fungible tokens (NFTs) in order to fundraise their resistance against the Russian invasion, in what constitutes their latest effort to use cryptocurrency.
As the Ukrainian government continues its fight against the recent invasion, they have been soliciting cryptocurrency donations as a convenient and effective way to raise money internationally for military and humanitarian operations. Cryptocurrency has a number of advantages that make it uniquely attractive for such international fundraising operations. Because cryptocurrency payments can be transferred anonymously, they can serve to anonymize donors, who may prefer to avoid scrutiny for their investments in Eastern European wars. Additionally, the nature of cryptocurrency technology makes it uniquely convenient for international money transfers, avoiding the intermediaries necessary for such transfers in traditional finance.
A Feb. 8 report (over two weeks before the Russian invasion of Ukraine) by the blockchain researcher Elliptic revealed that Ukrainian defense and hacking groups had received $550,000 in 2021, compared to a scant $6,000 the year prior. More recent analysis from Elliptic claims that Ukraine has fundraised $54.7 million through cryptocurrency since the beginning of the Russian invasion, dwarfing previous donation rates as Ukrainian defense has become a cause célèbre in the West.
Prior to Thursday, Ukraine had planned a “crypto airdrop,” a project which would offer cryptocurrency donors free tokens as an incentive to donate to the war effort.
However, on Thursday, vice-prime minister Fedorov announced via a tweet that the crypto airdrop project would be dropped in favor of a line of NFTs to raise money for the Ukrainian state’s defense efforts.
“After careful consideration we decided to cancel airdrop,” said Fedorov. “Every day there are more and more people willing to help Ukraine to fight back the agression. Instead, we will announce NFTs to support Ukrainian Armed Forces soon. We DO NOT HAVE any plans to issue any fungible tokens.”
Fedorov did not specify any further details for the upcoming NFTs.
While Fedorov did not specify why the airdrop project was canceled, it may have something to do with a parody of the promised cryptocurrency called the “Peaceful World” token, originating from an unknown entity marked by Etherscan as coming from a problematic address, suggesting a possibility of fraud.
The withdrawal from the cryptocurrency airdrop project has provoked discontent among some donors, 95 percent of whom offered donations in denominations of 0.001 or 0.01 Ether, likely expecting a free token in response.
Last week, Fedorov urged major cryptocurrency exchanges to block transactions from Russian users, in part of an effort to isolate Moscow from international finance. However, numerous platforms have declined to implement such a ban, allowing cryptocurrency to continue to flow into Russia.