05
Lessons from Ukraine
05
Lessons from Ukraine
Following the Russian invasion, an estimated eight million Ukrainians left the country, and further eight million were displaced within Ukraine.73 This has been caused by the Russian tactics of targeting residential areas and crucial civilian infrastructure, which also sharply limited access to the pre-existing financial infrastructure. 74, 75
Ukraine was already relatively advanced on digitalisation and digital asset use – and so was quick to grasp the usefulness of such solutions in providing their citizens and entrepreneurs with alternatives to damaged or otherwise unavailable traditional infrastructure.76 Prior to the Russian invasion, in 2019, the Ukrainian government launched an initiative called Diia, which provides a wide range of e-government services through a mobile app and web portal, including the world’s first digital passport and access to 14 other digital documents along with 25 public services.77 It is used by more than half the Ukrainian adult population.78 The e-commerce sector in Ukraine was also growing steadily before the invasion, supported by the increasing adoption of digital payment systems. Various online payment platforms and digital wallets gained popularity, facilitating online shopping and transactions.79
“[Diia] is used by more than half the Ukrainian adult population.”
The Ukrainian government acted quickly to facilitate the use of digital assets after the invasion. In March 2022, President Volodymyr Zelenskyy signed a law officially legalising digital assets in Ukraine, establishing a regulatory framework to ensure convenient and secure access to the global market for digital assets.80 Given the various pressures on the fiat currency (hryvnia) as well as uncertain or intermittent access to bank accounts, many Ukrainians turned to digital assets like Bitcoin and stablecoins as a reliable store of value and medium of exchange.81
There have been widespread reports of digital assets, such as Bitcoin, Ethereum and Tether being used by Ukrainians to access and transport their savings after the Russian attacks made access to traditional financial institutions difficult.82, 83 These solutions notably also provided cross-border access to finance for refugees who would otherwise have had to try and set up bank accounts in their temporary foreign host countries (noting that an estimated 90% of displaced Ukrainians planned to return as soon as possible).84 In that sense, gaining access to cross-border banking services can be seen as disproportionately costly and burdensome if it is not going to be on a permanent basis. The ease of leaving Ukraine with one’s savings in digital assets also eliminated the need to carry cash in a dangerous environment.85 Mobile payments, Bitcoin and stablecoins made it substantially easier for refugees to receive and send money and for MSMEs to continue operating in their temporary host countries.
The UNHCR has notably partnered with the Stellar Development Foundation (SDF), alongside money transfer company MoneyGram, and Circle (issuer of the USDC stablecoin, which is pegged to the US dollar) to pilot a system for distributing aid directly to Ukrainian refugees on their phones.86 In this case, the UNHCR delivers USDC via the Stellar network to a digital wallet that can be accessed via smartphone. The recipient can then exchange these stablecoins for fiat currency at any MoneyGram office in approximately 945 cities in Ukraine or any of their 350,000 locations worldwide. Pilots of this system have to date delivered aid to some 1500 individuals and disbursed more than $1.1 million in essential aid.87 The UNHCR is investigating the deployment of a similar system to assist those displaced by the economic crises in Venezuela and Argentina, and others see potential use cases in delivering aid in Türkiye or Syria.88
While these solutions have clearly demonstrated their utility in the Ukrainian context, their uptake was highly context-specific with Ukraine having been quite advanced in relation to digitalisation and making the necessary regulatory changes swiftly. Much more needs to be done to tackle some of the barriers to their wider deployment, both in Ukraine and other conflict or crisis situations around the world. The following section looks at the remaining barriers including how to address these.
The UNHCR has notably partnered with the Stellar Development Foundation (SDF), alongside money transfer company MoneyGram, and Circle (issuer of the USDC stablecoin, which is pegged to the US dollar) to pilot a system for distributing aid directly to Ukrainian refugees on their phones.86 In this case, the UNHCR delivers USDC via the Stellar network to a digital wallet that can be accessed via smartphone. The recipient can then exchange these stablecoins for fiat currency at any MoneyGram office in approximately 945 cities in Ukraine or any of their 350,000 locations worldwide. Pilots of this system have to date delivered aid to some 1500 individuals and disbursed more than $1.1 million in essential aid.87 The UNHCR is investigating the deployment of a similar system to assist those displaced by the economic crises in Venezuela and Argentina, and others see potential use cases in delivering aid in Türkiye or Syria.88
While these solutions have clearly demonstrated their utility in the Ukrainian context, their uptake was highly context-specific with Ukraine having been quite advanced in relation to digitalisation and making the necessary regulatory changes swiftly. Much more needs to be done to tackle some of the barriers to their wider deployment, both in Ukraine and other conflict or crisis situations around the world. The following section looks at the remaining barriers including how to address these.
1500
individuals have received aid through pilots of this system
$1.1M
in essential aid were disbursed
Following the Russian invasion, an estimated eight million Ukrainians left the country, and further eight million were displaced within Ukraine.73 This has been caused by the Russian tactics of targeting residential areas and crucial civilian infrastructure, which also sharply limited access to the pre-existing financial infrastructure. 74, 75
Ukraine was already relatively advanced on digitalisation and digital asset use – and so was quick to grasp the usefulness of such solutions in providing their citizens and entrepreneurs with alternatives to damaged or otherwise unavailable traditional infrastructure.76 Prior to the Russian invasion, in 2019, the Ukrainian government launched an initiative called Diia, which provides a wide range of e-government services through a mobile app and web portal, including the world’s first digital passport and access to 14 other digital documents along with 25 public services.77 It is used by more than half the Ukrainian adult population.78 The e-commerce sector in Ukraine was also growing steadily before the invasion, supported by the increasing adoption of digital payment systems. Various online payment platforms and digital wallets gained popularity, facilitating online shopping and transactions.79
“[Diia] is used by more than half the Ukrainian adult population.”
The Ukrainian government acted quickly to facilitate the use of digital assets after the invasion. In March 2022, President Volodymyr Zelenskyy signed a law officially legalising digital assets in Ukraine, establishing a regulatory framework to ensure convenient and secure access to the global market for digital assets.80 Given the various pressures on the fiat currency (hryvnia) as well as uncertain or intermittent access to bank accounts, many Ukrainians turned to digital assets like Bitcoin and stablecoins as a reliable store of value and medium of exchange.81
There have been widespread reports of digital assets, such as Bitcoin, Ethereum and Tether being used by Ukrainians to access and transport their savings after the Russian attacks made access to traditional financial institutions difficult.82, 83 These solutions notably also provided cross-border access to finance for refugees who would otherwise have had to try and set up bank accounts in their temporary foreign host countries (noting that an estimated 90% of displaced Ukrainians planned to return as soon as possible).84 In that sense, gaining access to cross-border banking services can be seen as disproportionately costly and burdensome if it is not going to be on a permanent basis. The ease of leaving Ukraine with one’s savings in digital assets also eliminated the need to carry cash in a dangerous environment.85 Mobile payments, Bitcoin and stablecoins made it substantially easier for refugees to receive and send money and for MSMEs to continue operating in their temporary host countries.
The UNHCR has notably partnered with the Stellar Development Foundation (SDF), alongside money transfer company MoneyGram, and Circle (issuer of the USDC stablecoin, which is pegged to the US dollar) to pilot a system for distributing aid directly to Ukrainian refugees on their phones.86 In this case, the UNHCR delivers USDC via the Stellar network to a digital wallet that can be accessed via smartphone. The recipient can then exchange these stablecoins for fiat currency at any MoneyGram office in approximately 945 cities in Ukraine or any of their 350,000 locations worldwide. Pilots of this system have to date delivered aid to some 1500 individuals and disbursed more than $1.1 million in essential aid.87 The UNHCR is investigating the deployment of a similar system to assist those displaced by the economic crises in Venezuela and Argentina, and others see potential use cases in delivering aid in Türkiye or Syria.88
While these solutions have clearly demonstrated their utility in the Ukrainian context, their uptake was highly context-specific with Ukraine having been quite advanced in relation to digitalisation and making the necessary regulatory changes swiftly. Much more needs to be done to tackle some of the barriers to their wider deployment, both in Ukraine and other conflict or crisis situations around the world. The following section looks at the remaining barriers including how to address these.
The UNHCR has notably partnered with the Stellar Development Foundation (SDF), alongside money transfer company MoneyGram, and Circle (issuer of the USDC stablecoin, which is pegged to the US dollar) to pilot a system for distributing aid directly to Ukrainian refugees on their phones.86 In this case, the UNHCR delivers USDC via the Stellar network to a digital wallet that can be accessed via smartphone. The recipient can then exchange these stablecoins for fiat currency at any MoneyGram office in approximately 945 cities in Ukraine or any of their 350,000 locations worldwide. Pilots of this system have to date delivered aid to some 1500 individuals and disbursed more than $1.1 million in essential aid.87 The UNHCR is investigating the deployment of a similar system to assist those displaced by the economic crises in Venezuela and Argentina, and others see potential use cases in delivering aid in Türkiye or Syria.88
While these solutions have clearly demonstrated their utility in the Ukrainian context, their uptake was highly context-specific with Ukraine having been quite advanced in relation to digitalisation and making the necessary regulatory changes swiftly. Much more needs to be done to tackle some of the barriers to their wider deployment, both in Ukraine and other conflict or crisis situations around the world. The following section looks at the remaining barriers including how to address these.
1500
individuals have received aid through pilots of this system
$1.1M
in essential aid were disbursed