Alex Bornyakov, the Deputy Ukrainian Minister of Digital Transformation, joins Yahoo Finance Live to discuss cryptocurrency donations made to Ukraine's military and the role of crypto in evading sanctions amid Russia's ongoing invasion of Ukraine.
- Ukraine has seen an outpouring of support from around the world as it tries to fend off the Russian invasion. Some of that outpouring has come in the form of cryptocurrency donations. Let's talk more about this with Alex Bornyakov, who is the Deputy Ukrainian Minister of Digital Transformation and joins us from Ukraine. Yellow Finance's cryptocurrency reporter David Hollerith is here as well. Alex, good to see you this morning. Thanks for hopping on with us. Before we even get to the cryptocurrency donations here and what things are happening there on that front, just can you explain to us what you're seeing on the ground in your area at the moment right now?
ALEX BORNYAKOV: Well, hi, everyone. Well, at first, when it all started, I was in Kiev the first day they started to fire rockets, and there was, like, a series of explosions. We were-- as a ministry, we were evacuated. Unfortunately, I can't give you the exact location, but even where we are right now, there are sometimes the sirens. And we have to go into shelter from time to time, but we are in a relatively safe environment at this point.
- Hi, Alex. The Ukrainian government has received almost $60 billion in cryptocurrency donations as far as the latest goes, and you've already spent some of that money, some of the donations on military supplies and relief efforts. So I was sort of wondering, of course, your country has and will receive donations from NATO countries, and those donations of funds will be much larger. But I'm curious, what role are you seeing cryptocurrency play during this conflict?
ALEX BORNYAKOV: Well, I think that, in times like that, the response time is crucial. So the Fiat currencies and the Fiat funds that exist in the first day were National Bank of Ukraine created a Fiat fund. But with their time and the speed of regular, like, a banking system, it was impossible to sort of, like, finance important things for the army. So I think their crypto are playing a role to give this flexibility in when it's really needed. She responds really quickly to deliver the army with their required supply.
- Deputy minister, it's Julie, here, and first, I do want to acknowledge, obviously, the duress that you all are under and our wishes for you and your family's safety at this time. When it comes to using the cryptocurrency donations you receive, can you describe to us a little bit about how the process works? Do you have to convert all of it to Fiat? Are some of your suppliers accepting cryptocurrency? In other words, is it-- does the cryptocurrency, receiving the donations in that way, does it increase the friction at all in terms of how you're able to use it?
ALEX BORNYAKOV: Well, in general, like, the fund works in a mode of the public private partnership, so we partnered with a private exchange, which help us dealing with the security matters, with exchange matters. Because we don't want the money to be stolen, or we don't lose access. So there is a sort of infrastructure that has to be built in order such fund to operate, and when the Ministry of Defense formed a request, it's, basically, the companies that deliver those goods. And some of them accept crypto. Some of them did not or don't accept crypto at all. So when they're accepting, we're just exchanging with wallets, IDs, and make those transfer. If it's impossible, then exchanges convert this money and send over a banking system.
- And, Alex, last week, the Ukraine's official Twitter account had said that they would reward crypto donations with some sort of airdrop, and it sounds like that's been pushed back. And it certainly doesn't seem like the government's top wartime priority, and with that understanding, I was sort of curious if you could tell us more about what's going on with that program at this point.
ALEX BORNYAKOV: Well, in the first place, there was an initiative to, like, increase awareness. But then we realized that, in this time, it was very hectic, and actually, there were a lot of people that just donated, like, a very small amount. And they just wanted to get rewarded, but this fund-- you know, Ukraine is suffering right now. And I don't think it's time to take profits and just use airdrop as a means of profit, so we decided to decline it.
But one of the major thing actually was, like, a technical preparations. We realized that this is almost impossible. Well, maybe it's going to be airdrop at some point, but right now, Russia is very active in their military action. So we need to focus ourselves on defending a country rather than going further with the airdrop.
- Alex, for those that don't have extensive knowledge in this space, is there a way for Russia to be cut off from the crypto markets? Because a lot of stories and a lot of focus right now is on how they might be using crypto markets to evade some of these Western sanctions.
ALEX BORNYAKOV: Well, yeah, that's actually a very good question, and we started to work towards this direction, trying to tell major changes that is it's unacceptable to work with Russia at this point. Because they use this money to kill civilian people, to invade a free country without any reason, and put their public government and whatever, so children dying, and people dying. So we informed those exchanges with official letters with calls, where we can reach to whom we can reach out to stop work with Russia, because those are blood money.
And in many cases, those money comes from corruption, so at this point, some of the changes went out. So they stopped the operation with Russia, some of them limited, and what is definitely going on, that there's a huge sanction list of thousands of people and related to those people who were blocked already. And we know that they're blocked, because I saw on social media that they're complaining. So this is what's definitely going on. All the major exchangers responded for that request, and I think that's a small step. But the ball is slowly moving, and I think, after some time, bringing more and more awareness to this issue, more and more exchanges, we're going to get out from Russia.
- And that also brings up another question when you talk about social media and getting awareness out. It seems as though your leadership has been really active when it comes to social media to getting the word out, to letting people know what's happening on the ground there, and I'm curious how deliberate a strategy that has been or whether it's just sort of happened organically as this conflict is unfolding.
ALEX BORNYAKOV: Well, you can't build a strategy before-- actually, well, there were some rumors. But no one really expected they will go all in for, like, invading Ukraine from all the angles, and bombing civil cities, and rocketing, and shelling. So the main thing just is just to respond to this pain that we have seen our nation suffering, so we decided to fight back. And we think that Russian people deserve to know that their government actions in 21st century for [INAUDIBLE] country is unacceptable, and they live in some sort of a bubble, information bubble.
And I think the more we push economically, the more they understand that something is wrong. So they start asking questions to their government, why we became so poor, or we're losing money, and we're losing-- and all the world hate us. So eventually, we think that the strategy is to make everyone in Russia realize that you can't just support the war in 21st century.
- And we really appreciate you taking the time to speak to us, obviously, in what is a very difficult situation for yourself, for your nation. Thank you so much for giving us some insight into what you all are doing. Alex Bornyakov is the Deputy Ukrainian Minister of Digital Transformation. Stay safe, and may all of Ukrainians stay safe for that matter. Thank you so much. Our David Holloway joining for this conversation as well.
ALEX BORNYAKOV: Thank you.