Interview with Ukraine’s Deputy Minister of Digital Transformation, who says the government’s crypto donation platform has raised $70M+ as of April 1 — Quick Take — The Block spoke with Alexander Bornyakov, Deputy Minister of the Ukrainian Ministry of Digital Transformation.
An inside look at Ukraine’s digital ministry and its crypto efforts in times of war
In this episode of the Block, we speak with Alexander Bornyakov, the Deputy Minister of the Ukrainian Ministry for Digital Transformation.
Cryptocurrencies have played a surprising role in the current conflict between the US and Russia. As far as Bornyakov is concerned, the blockchain industry has a large role to play in Ukraine’s future.
Despite our approximate 5,000-mile distance, Bornyakov won’t disclose his location.
Despite being in Ukraine, it’s not in Kyiv, so natural light is scarce. Like all Ukrainian officials for the past two months, Bornyakov is clearly short on sleep. With an e-cigarette in hand, he gestures. Life during wartime is remarkably digitized.
It is at this point that he goes offline in order to answer another call, this time from Chernihiv, a city that is less than 100 miles from Kyiv. As he returns to my screen, he tells me that if we do not somehow change this, Chernihiv is going to become the next Mariupol.
As it stands, it is a strange moment in the history of Ukraine that Bornyakov, who is in charge of implementing digital transformations at the Ministry of Digital Transformation, or MinTsifry, has found himself a critical link in the battle for the country’s independence.
Bornyakov points out that there was the conflict in the eastern part of Ukraine, which was well known. I found out later that they did not want to just destroy Ukraine in any way, they wanted to destroy it completely. As a result, almost all of what we were doing before was stopped almost completely. We realized very early on that we wouldn’t be able to win the battle by ourselves. I am afraid that if we are going to stand alone, things are going to turn out very badly for us.”
He was involved in a series of tech and IT startups prior to joining MinTsifry in 2019, including ones in Kyiv, New York, as well as his hometown of Odessa, where he hails from. Although it is far from a traditional military background, it is an advantage that has never been matched in a war that has increasingly been centered on digital engagement.
The engagement of the international community in this context involves the provision of weapons, training, and money to the Ukrainian war effort, the enactment of global sanctions against the Russian economy, as well as a need to unite the Ukrainian people.
A crucial component of MinTsifry’s appeal to the outside world is the company’s solicitation of crypto donations, which began at the end of February, to help fund Ukraine’s war effort. Bornyakov explains that there was a huge problem with transfers due to the severe restrictions imposed by national banks with regards to sending transfers.
In fact, the initiative was actually the brainchild of Michael Chobanian, the founder of one of the world’s leading crypto exchanges, KUNA, who set up wallets for receiving donations that MinTsifry would later decide to use as the official accounts of the government.
As of April 1, over $70 million had been raised in cryptocurrencies through the government’s official donation platform.
A recent World Bank report puts the national defense budget at roughly $5.4 billion. Government donations boost that budget by a percent and a half. A $13.6 billion emergency package included in the US budget bill earlier in March pales in comparison.
Crypto donations through MinTsifry provided individuals with a way to support Ukraine’s fight without relying on intermediaries.
In particular, Ukraine’s use of cryptocurrency in donations served as a useful counternarrative to concerns over Russia’s hypothetical use of crypto to evade sanctions. In fact, Michael Chobanian would be appearing before the Senate Banking Committee to discuss his experience fleeing his home.
It’s part of a broader social media push for engagement in a war that’s been documented to an unprecedented extent. Twitter has been included at MinTsifry.
Bornyakov says Twitter wasn’t popular in Ukraine before the war. It would change everything. In the past month, Mykhailo Fedorov, the vice prime minister and minister of MinTsifry, has grown his follower count to almost 260,000.
Russia and Ukraine produce disproportionately many IT professionals and hackers, making the digital front a focal point long before Russian forces moved on Kharkiv and Mariupol. However, the narrative surrounding war has largely faded from hard hacks.
Cryptocurrencies, on the other hand, have not been affected.
As president of the Ukrainian Republic Volodymyr Zelensky, he has found himself largely occupied with the concerns of wartime. In spite of the fact that crypto has gained curious prominence in recent years, a law legalizing the sector has just recently been added to Zelensky’s agenda after years in the making.
“Before the war parliament signed this legislation, we spent almost three years trying to pass it through the war parliament,” says Bornyakov. The President Zelensky decided to send a strong signal that our country is a crypto-friendly country by sending a strong signal to the world. One day – once we have won the war – we are going to invite all companies to work in Ukraine and also move their business here once we have won the war.”
Bornyakov believes that the specific utility of crypto lies both in the provision of jobs and the payment of taxes, as well as the upgrading of Ukraine’s financial system. It is the only industry that is growing at such a rapid rate. In order to rebuild our infrastructure and to restore the way we live after the war, we will need to allocate a great deal of resources.”
There is one lingering question that needs to be answered and that is how long the war actually lasted. In spite of the fact that as of this writing there have been some positive signs coming out of the peace talks, the end is still far away. According to Bornyakov, the longer the war goes on, the less likely it will be that Ukrainians who have been displaced by the conflict will be able to return to their old lives. The jets and rockets fired in Kyiv when I awoke in the morning when I was there. This environment is not conducive to working,” he says in a laconical tone.