Kraken’s Ukrainian donations the perfect solution to Russian sanction dilemma
I feel like all I’ve written in the last couple weeks has been about Russia invading Ukraine and the impact on the markets. Obviously, it has been quite sombre. But today, there was some good news, albeit a bit trivial on a larger scale. Still, it’s a nice change.
Publicity Stunt?
Kraken announced they are to donate Bitcoin to all Ukrainian accounts registered prior to March 9, 2022. At first, I assumed it was likely a publicity stunt, with the qualification criteria stringent. But upon digging into the details, I have to give Kraken credit – it appears if you have a Ukrainian account, it is quite easy to claim.
Must be registered from Ukraine prior to March 9th, 2022
Must be an “Intermediate” or “Pro” account (this means you will have verified with photo ID, so pretty easy)
Must log in before May 1st , 2022 to claim the Bitcoin
The amount is substantial too. If you held a balance in your account at any stage, you are eligible to claim $1000 (Kraken refers to this as Tranche 1). If you have never held a balance (Tranche 2, as Kraken calls it), you are still eligible for $500 in Bitcoin.
There is actually more, too. A $1000 credit will be applied to accounts for purpose of offsetting currency conversion fees going forward. The aid package will also be increased by the amount of trading fees paid by Russia-based clients in the first half of 2022.
Moral Dilemma
I wrote a piece last week looking into the moral dilemma that crypto exchanges find themselves in regarding the freezing of Russian accounts, following the appeal on Twitter from Ukrainian Vice President Mykhailo Fedorov.
Kraken CEO Jesse Powell refused the above request, arguing “Bitcoin is the embodiment of libertarian values, which strongly favour individualism and human rights”. Given crypto’s roots in individual liberty, I have sympathy in that he (and other exchanges) found themselves in quite a tough spot.
I believe that this initiave – avoiding freezing accounts, but donating the Russian fees collected to Ukrainian accounts, as well as further aid – amounts to a perfect solution to a difficult moral dilemma.
“We hope to continue being able to provide critical financial services in time of need to both our clients in Ukraine and Russia”, Kraken CEO Jesse Powell announced. “Cryptocurrency remains an important humanitarian tool, especially at a time when many around the world can no longer rely on traditional banks and custodians”.
In such a way, Powell has managed to delicately balance both crypto’s fierce defense of liberty, privacy and self-custody with the moral obligtion to come to Ukraine’s help, be that either directly or via levelling sanctions against Russia.
On-Chain Impacts
Finally, I want to look at quite how much Bitcoin Kraken are giving away. Let’s take the lower band of $500 dollars worth of Bitcoin. At time of writing (Bitcoin trading at $42,300), $500 worth equates to 0.012 bitcoins. Given Bitcoin’s tendency for volatility, let’s round down a bit for conservatism and assume they receive 0.01 bitcoins.
Looking at on-chain data, only 23.6% of Bitcoin addresses actually contain more than 0.01 bitcoins. That means even the Tranche 2 Ukrainian accounts, who will receive the lower amount of $500, will be in the top quarter of Bitcoin holders. Wow.
Cool move, Kraken.
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