Crypto and the State: Strange Bedfellows in the War on Ukraine

By Jim Mignano

“So is Bitcoin money?” people often ask when I mention studying digital currency. Usually, my answer is some admittedly uninspiring variation of “it depends,” or “well…” 

As it turns out, some pretty influential voices are clearing up the answer. In the midst of a horrible war,  crypto has been all over the news. Key state actors–namely the governments of Ukraine, Russia, and the United States–are treating crypto as a form of money through both word and deed. (The irony is glaring, considering some crypto motivations to operate independent of the state, but that’s for another post.)

Take for example, the Ukrainian government campaign to raise donations via crypto. The campaign amounts to a recognition of crypto by the Ukrainian state. But the move isn’t just symbolic. To date, the Ukrainian government has received over $50 million in donated crypto. And in a surprising contrast to the convention that crypto can’t be used to purchase much of value, Michael Chobanian, the founder of, reports that “ninety percent of [Ukrainian crypto fund] payments are done in crypto only.” While the crypto campaign pales in comparison to other fundraising efforts, such as Ukraine’s $277 million war bond auction, it reflects how far crypto has come since Bitcoin was exchanged for pizza in 2010.

Russian authorities have been far opaquer in their approach to crypto. It is easy to see why. On the one hand, a robust crypto market may empower the Russian populace. On the other hand, the Russian kleptocratic elite may use crypto to divert funds and circumvent sanctions.

This second Russian application of crypto has drawn the U.S. government’s attention. On March 7, 2022, the Treasury’s Financial Crimes Enforcement Network (FinCEN) Department issued a “red flag” alert, explaining that financial institutions’ obligation to assist in applying sanctions covers “convertible virtual currency.” With respect to compliance obligations, FinCEN’s alert places crypto on equal footing as “traditional fiat currencies.”

So, is crypto money? These days, some key institutions are acting like it is. The debate over Bitcoin’s properties and value will continue, but context matters. For the bank meeting its regulatory obligations, some crypto has effectively been deemed worthless. For the Russian watching their rubles plummet, converting into crypto may be a reasonable way to retain value. And for the Ukrainian soldier on the frontlines, it makes little difference whether they’re supplied using crypto, as long as they’re supplied.

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