Digital assets make a difference in war-torn countries — here’s the benefit to consumers and businesses

Cryptos provide financial access in collapsed banking systems, opening doors for war-affected populations.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

The following is a guest post and opinion from Sergii Malomuzh, Founder of Rewump.

War-torn nations are among the most financially marginalized regions in the world: destructive conflicts impact people’s living standards and harm local economies. With traditional banking often inaccessible, digital assets emerge as crucial legal tender in conflict zones.

Satoshi Nakamoto designed Bitcoin (BTC) to empower people with peer-to-peer (P2P) transactions free from centralized oversight. Bitcoin has inspired other digital currencies, including stablecoins, which serve as the last hope for people living in war-affected countries.

Despite the challenges in crypto adoption, ranging from regulatory concerns to user literacy, the asset class remains indispensable to distressed nations.

The Need for Crypto in Warring Nations and Backing Regulations

Banking systems might face severe disruption, depending on the nature of a conflict. Since most businesses cannot operate in active war zones, they relocate to safer regions. Those that stay charge steep premiums for their services, passing the cost burden to civilians.

This shift is poised to affect both living standards and business viability. As a result, users increasingly turn to Bitcoin, stablecoins, and altcoins to cushion the impact posed by digital transaction restrictions and cross-border settlement constraints.

Moving cash is essential for residents’ survival in distressed economies. Cryptocurrencies’ speed, low cost, and easy accessibility make them a viable alternative to traditional currencies.

These digital assets also enable users to bypass sanctions imposed by Western banking systems. The key concern is ensuring that the quality of life is not compromised and businesses can still easily transfer value.

In regions like Ukraine and Syria, governments are pushing to legitimize cryptocurrencies. Such measures may lead to greater institutional recognition of the nascent asset class, building public confidence.

In 2022, Ukraine passed the “On Virtual Assets” law, formally establishing crypto’s legal status. The legislation classifies virtual assets as property, granting individuals and businesses legal rights to own, use, and trade digital assets. Regulatory oversight falls to both the National Bank of Ukraine and the National Securities and Stock Market Commission.

Syria currently lacks formal crypto regulations; however, the government is actively drafting legislation. These measures aim to reignite the local economy and attract foreign investment.

Key Benefits of Crypto in War-Torn Regions

The adoption of cryptocurrencies in conflict zones has defined distinct advantages to individuals, businesses, and governments.

A primary benefit of using digital currencies in war-torn nations is their accessibility. These assets remain functional even when traditional banking infrastructure has collapsed.

Beyond that, stablecoins — accounting for about 70% of daily crypto transactions — serve as an inflation hedge, maintaining a 1:1 peg to the US dollar, which typically sees lower inflation than domestic currencies in conflict-affected regions.

Crypto’s lower barriers to entry — requiring only a digital wallet with minimal verification — make them particularly valuable for displaced populations in conflict areas who may lack access to conventional banking services. Businesses can execute cross-border payments without settlement concerns, drawing on the robust liquidity in crypto markets.

Today, more than $52 billion Tether (USDT) has been traded, according to CoinMarketCap. The stablecoin market has recorded over $66 billion in 24-hour trading. This implies that no matter how big a transaction is, there is good reason to believe there are enough funds to settle it.

At the national level, turning excess energy into a Bitcoin mining resource is also a major advantage of crypto during the war. Using untapped energy resources for Bitcoin mining could deliver multiple economic benefits, including monetizing excess energy, attracting foreign investment, creating jobs, and generating supplemental government revenue.

The global and decentralized nature of cryptocurrencies has proven effective for fundraising efforts. This has particularly helped Ukraine generate as much as $225 million in various digital currencies.

Digital currencies can serve as a hedge against hyperinflation. When profiled over the longer term, Bitcoin has consistently outperformed fiat currencies and traditional assets in long-term percentage gains. While the coin exhibits intense volatility, its overall trajectory has trended positively in the long run.

In Syria, annual inflation has averaged 100% over the past four years, with the national currency depreciating by 30-fold. By contrast, Bitcoin’s inflation rate stands at just 1.5%, while its value has increased by 240% during this period.

These benefits signify that digital currencies play a critical role in sustaining both individuals and national economies during geopolitical conflicts.

Are There Downsides to Crypto Adoption?

As with any innovation, there are limitations and downsides to using digital currencies in warring countries. One of the most obvious is the potential for inadvertent financing of terrorist organizations.

Western regulators particularly emphasize this vulnerability, making it a key focus of Know Your Customer (KYC) and Anti-Money Laundering (AML) compliance frameworks.

The absence of centralized oversight also means there are challenges in transaction protection and recovering funds in case of fraud. Additionally, existing regulatory frameworks often prove inadequate, creating many gray areas that businesses may exploit against the average consumer.

At the business level, depressed economic activities may incentivize unauthorized crypto mining operations that strain national energy infrastructure.

Poor digital infrastructure and low levels of financial literacy among local populations can make adoption even harder. Nevertheless, cryptocurrencies and digital asset service providers remain the first line of contact in distressed regions.

Cryptocurrencies present more agile solutions to financial challenges compared to traditional systems. This responsiveness positions digital assets as potential drivers for economic transformation in warring countries and hyperinflationary economies.

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