An Extraordinary Moment
“…this is not an ordinary moment. We need to take extraordinary action to meet this threat to our international system and to do everything we can to help Ukraine and its people”
This is how U.S. Ambassador Linda Thomas-Greenfield commented the United Nations Security Council’s decision to call an emergency session after Vladimir Putin had unleashed full-scale war in Europe. It is the first UNSC emergency session since 1982. And a war unseen in Europe since the Second World War.
The barbaric violence that has befallen the people of Ukraine has shocked us all. And it is difficult not to see it as a product of everything that could go wrong with the socio-political and economic systems. We are witnessing the lethal actions of a super-centralised, unchecked, and unaccountable authoritarian regime. Increasingly, it seems, it is not even a regime — but solely, a more dictatorial leader with blood on his hands: Vladimir Putin.
This brutality and the ensuing international sanctions are also roiling markets globally. Supply chains already disrupted by the COVID–19 pandemic will be further strained. Bank runs, a classic weakness of centralised traditional finance, have been reported throughout Ukraine, Russia, and even elsewhere at offices of Russian banks abroad. The price of oil and gold is through the roof; market indices are down.
Cryptocurrencies have been showing the characteristics of speculative, high-risk assets. They started to fall at the first news of Russia invading Ukraine. But Bitcoin’s recovery also implies that Bitcoin may prove more resilient than before. Blockchain currencies are much more integrated with mainstream finance today. Many more stakeholders own and trade them than in previous years — also thanks to institutional investors’ faith in them and more venture capital funding.
But crypto is not all there is to DeFi. Its global financial solutions, without powerful banks and sometimes authoritarian governments in charge, promise more financial freedom than ever.
This is also the spirit of the resistance of the people of Ukraine. Its government and armed forces are raising funds and collecting donations using cryptocurrencies. Anyone in the world, perhaps even from Russia, has the chance to contribute to the self-defence of a nation fighting Putin’s aggression. And crypto may prove an important lifeline to the country’s population short on banking services amidst the chaos brought on by the war. And outside the blockchain space, hacking Russian government websites to promote anti-war messages and online as well as real-life protests keep the spirit of decentralised, free democratic action alive.
These are also the values that drive the DeBond team in working towards a freer, fairer DeFi.
However, we must also acknowledge the current system’s shortcomings, too. It is well-known that no “Know Your Customer” (KYC) and no anti-money-laundering laws mean that blockchain technologies can be also used for illicit purposes. Russian entities might already have extorted more than 400 million USD worth of cryptocurrency using ransomware attacks, 74% of all estimated ransomware revenues globally. The Russian government itself aims to exploit the weaknesses of the current blockchain space — having had launched the digital rouble — admittedly, to evade international sanctions.
But decentralisation and more privacy does not need to mean lawlessness, criminality, or anarchy. It must not. It should mean transparency and openness. Without them, trust cannot exist. Just as traditional banks today are key partners in implementing financial regulations, there is no reason why decentralised, community-led blockchain platforms could not enforce and uphold democratically made, just rules. Using smart contracts and governance tokens to vote, it is possible to create decisionmaking mechanisms that are more transparent, more pluralistic, and more consistent than ever. Such a reform has the potential to shift the control of the financial system from the few privileged to many everyday people.
In fact, there are precedents of justified legal action and enforcement in the blockchain space. For example, Russian cryptocurrency addresses were sanctioned by the US Treasury due to their involvement in election interference years ago. And in the current situation, the US government is on track to apply new kinds of sanctions, including Russia’s access to cryptocurrencies.
The US government is also asking crypto exchanges to block exchanges in certain countries or currencies. Most of them are willing comply. Only some cite opposing viewpoints. Binance says that “…to unilaterally decide to ban people’s access to their crypto would fly in the face of the reason why crypto exists”.
While we believe that human rights must always fully apply, we believe that there is a slip in Binance’s reasoning. An accountable, legal, and democratic government’s measures cannot be called unilateral. Their decisions must be made in consultation with several independent stakeholders, elected officials, and agencies — as it happened. But we agree that an indiscriminate, blanket ban is not the right way to aid the people of Ukraine in their fight against aggression. This is the age-old dilemma of how to target sanctions to hit perpetrators, those who are responsible for human rights violations — rather than ordinary people, who may be innocent onlookers, even victims. DeFi communities and companies must find ways to make this distinction. We believe that there is a smart and transparent way to implement rightful sanctions.
This is why DeBond would absolutely welcome improved regulations — said to be already on their way — in the blockchain space. There must be rules that are not an intrusion of centralised, monopolistic or authoritarian organisations, governments, or companies. We hold elaborate, yet easy-to-understand set of principles and rules which DeFi communities and companies can democratically and transparently uphold for necessary.
We believe that in this extraordinary moment, we have a special responsibility in aiding vulnerable groups under physical attack: the people of Ukraine and many oppressed by the Putin and Lukashenko regime in Russia and Belarus, respectively. We wish to contribute to this with our work — aimed at protecting the values of DeFi, transparency, democracy, and financial freedom also in the face lethal aggression.
Let there be peace in Ukraine — and freedom in Russia; and everywhere.
