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From New Yorker

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Though Biden has been praised by foreign policy elites for his response since Russia’s attack, the conflict likely still seems far off to many Americans, notable mainly for deepening the sense that the world is going to hell.

Instead, it’s the state of the economy that continues to most unsettle the public, with 75 percent of respondents to the Post/ABC poll rating the economy as either “not so good” or “poor.” Asked about their personal finances, 35 percent of respondents said they were worse off since Biden took office, 17 percent said they were better off, and 47 percent said they were doing about the same.

That perception is likely due to high inflation eating into real incomes. According to the Bureau of Economic Affairs, real incomes decreased by 0.5 percentage points in fourth quarter of 2021 compared to one year prior. And bad news on this metric is associated with a bad performance for the president’s party in midterm elections.

But Biden’s problems are broader than the economy. His approval rating rapidly dropped in August of last year, as headlines were dominated by chaos in Afghanistan while he was withdrawing US troops. The media then moved on from Afghanistan, but the bad news continued with the rise of new Covid variants, as well as inflation. By the fall, polls showed that about half of voters gave Biden low marks for “competence.” In a new Quinnipiac University poll conducted after Putin’s attack, just 39 percent of respondents approved of Biden’s response to Russia, with 47 percent disapproving.

So from Afghanistan to his legislative agenda to the economy to the coronavirus to now Russia’s invasion of Ukraine, the narrative has been the same: that Biden is floundering and ineffective. Some of those criticisms are unfair, others are defensible — but that’s the perception he really needs to change to have any hope of avoiding a midterm debacle.

What the State of the Union can, and can’t, do for Biden

Biden will get to make the case for his crisis response, and for his presidency in general, with his State of the Union address Tuesday. And though Ukraine has been dominating headlines and will clearly be a focus, much of the speech is still expected to focus on the economy and the administration’s efforts to fight inflation, Nancy Cook of Bloomberg News reported.

The speech itself is unlikely to affect his approval — Gallup’s Jeffrey Jones has written that these addresses “rarely affect a president’s public standing in a meaningful way, despite the amount of attention they receive.” But his best opportunity to make a memorable historical statement may lie in the realm of foreign policy. Certain addresses focused on international matters have stood the test of time, in ways both good and bad.

In 1823 James Monroe used his “president’s message” (as the State of the Union, then delivered in writing, was then called) to announce what became known as the Monroe Doctrine, which became a cornerstone of American foreign policy. In 1941 FDR listed “Four Freedoms” that the US pledged to defend all over the world, as war raged. And in 2002 George W. Bush asserted that North Korea, Iran, and Iraq comprised an “axis of evil,” setting the stage for the US invasion of Iraq. Each of these was remembered for putting forward a distinct idea or memorable turn of phrase.

If Biden wanted to speak and craft rhetoric for history rather than short-term popularity, he could try to do so. But he also may want to avoid trying to define a new foreign policy doctrine now, amid a tense unfolding crisis. His imperative is still two- sided — he wants to signal resolve in standing up against Putin’s aggression, but he also would very much like to make clear a path to deescalating the crisis is possible.

It’s a tough balance to strike, particularly with the perceived need in the speech to cover all the domestic concerns that worry Americans as well. And there are other topics on Biden’s mind as well — such as his new Supreme Court nominee and his hopes of reviving the stalled Build Back Better bill in some form. Modern State of the Union addresses usually attempt to cover practically everything on the political agenda, even though they risk sounding like a laundry list.

More broadly, cryptocurrencies are quite volatile. While proponents of the crypto space often argue that bitcoin and the like are some sort of “digital gold,” they’ve lost value amid global uncertainty, undercutting the argument that they’re a kind of safe haven. If you imagine a scenario where you take $1,000 out of Ukraine in a cryptocurrency and by the time you’re able to convert it back to cash it’s lost half its value, that’s not ideal. But what if crypto is the easiest way to get money in a crisis? Is it better than nothing at all?

Ukrainians are using crypto — but there are limitations

Right now, at least some Ukrainians escaping the country seem to be taking their crypto with them, which they hope to convert back into fiat currency once they arrive to safety. Others seem to be looking toward crypto as a way to store their wealth as Ukraine’s economy collapses; the country’s central bank has already suspended electronic cash transfers and is blocking Ukrainian citizens from withdrawing foreign currency. Trading on the Ukrainian crypto platform Kuna reached its highest level since May 2021 this past Friday.

“In Ukraine right now, you can download a bitcoin wallet open source — totally unconnected from your ID — and you can generate an address via a QR code or an alphanumeric string,” Gladstein explained. “You can paste that to me, I can send you $1,000, and it goes through in a few minutes.”

Using crypto in the middle of a crisis isn’t necessarily easy. For one thing, you need an internet connection and a working device. You also need to know how to use crypto, which has a steep learning curve and is something people aren’t going to be able to pick up quickly in moments of crisis. There are thousands of cryptocurrencies, and they don’t all work the same way. Crypto also has to be available to buy: Right now, even wealthier Ukrainians are reportedly having trouble buying Tether, a digital currency that’s pegged to the US dollar. And if you’re only converting other assets you own into crypto now, the rest of the financial system needs to be working, too.

“It might work for some people, but they need first to unfreeze their assets, transfer them into digital currency, and then manage to get out [of the country], which is actually the main problem right now,” Coppi said. “And then when they’re out, hope it hasn’t devalued too much.”

That means that for now, crypto might be most helpful to the people who already have it. That could account for millions of people in Ukraine, which has spent the last few years aggressively promoting its own domestic cryptocurrency industry. In February, the country’s parliament passed a law “legalizing” crypto, and Ukraine now ranks fourth in the world in terms of crypto adoption, according to the blockchain research company Chainalysis.

Ukrainian army soldier seen at an ATM machine in Mayorske. Andriy Andriyenko/SOPA Images/LightRocket via Getty Images
A Ukrainian soldier at an ATM in Mayorske on December 11, 2021.

As the conflict continues, supporters of Ukraine are sending even more crypto into the country. On social media sites and platforms like Telegram, people — including leaders of the country’s burgeoning crypto sector — are sharing their crypto wallet addresses and soliciting donations. One NGO supporting the Ukrainian military has reportedly raised several million in cryptocurrency, and groups are using crypto to buy a motley collection of military equipment, medical supplies, and even a facial recognition app. Some of these fundraising efforts have been active for months, but picked up steam last week.

To be sure, if you’re looking to send crypto to help in Ukraine, it’s important to check if the people on the receiving end want it and are equipped to handle it. Notably, neither the Ukrainian Ministry of Defense nor the National Bank of Ukraine appear to be accepting cryptocurrency donations right now, though the government of Ukraine is, according to its verified Twitter account. Given crypto’s volatility, it’s also worth remembering that the amount of the donation in crypto isn’t set in stone and could drop fast.

“If they don’t ask you for it, don’t send it,” Coppi said.

Russia can also take advantage of crypto

The heroic version of crypto in crisis — one that paints it as an alternative for people in dire situations — obfuscates the darker side of the space. It’s a very pertinent side, in particular, with regard to Russia.

Even before Russia’s invasion of Ukraine, the United States government was worried that cryptocurrencies could dull the impact of economic sanctions. Iran has used bitcoin mining to bypass trade embargoes, according to research from the blockchain analytics firm Elliptic.

Multiple countries have begun to hit Russia with heavy sanctions. In some corners, that’s caused concern that Russia could use crypto to circumvent sanctions and move money undetected. As the New York Times outlines, the Russian government has been developing a digital ruble, and Russia has been building tools to help hide the origins of digital transactions. Basically, if sanctions are meant to keep countries and businesses from dealing with Russia, crypto would be a way to get around them. Michael Parker, a former federal prosecutor, told the Times it would be “naive” to think Russia hadn’t gamed out a scenario where sanctions were imposed and it would have to find alternatives.

People in masks walking by a 
currency exchange. Alexander Nemenov/AFP via Getty Images

People walk past a currency exchange office in central Moscow on February 24.

To avoid this scenario, Mykhailo Fedorov, Ukraine’s vice prime minister and minister of digital transformation, has called for crypto and blockchain platforms to block the addresses of Russian users. The Biden administration is also weighing how it might sanction Russian cryptocurrency assets, and has already urged crypto exchanges to ensure that specific, sanctioned individuals and organizations from Russia aren’t using their platforms.

While cutting off Russia’s access to crypto could have real repercussions for the country — crypto has become increasingly popular in Russia, which is also the world’s third-largest bitcoin miner — it may not be possible. Not all exchanges confirm the identity of their customers, and it’s generally difficult to track the origin of cryptocurrency transactions. Whether a cryptocurrency exchange legally has to comply with sanctions may depend on where they’re registered and where they operate. Many exchanges have rebuffed calls for them to freeze Russian accounts.

1/6 I understand the rationale for this request but, despite my deep respect for the Ukrainian people, @krakenfx cannot freeze the accounts of our Russian clients without a legal requirement to do so.

Russians should be aware that such a requirement could be imminent. #NYKNYC https://t.co/bMRrJzgF8N

— Jesse Powell (@jespow) February 28, 2022

Crypto can also be used to fundraise for bad actors. Just as pro-Ukrainian groups have been able to get funding via crypto, so have pro-Russian separatist groups in Ukraine, including in 2014, when Russia invaded and annexed the Crimean Peninsula, said Jess Symington, the head of research at Elliptic. “The pro-Russian groups were particularly active around the 2014 conflict,” she said.

Russia has heavy ties to crypto-linked cybercrimes and illegal activity such as money laundering and ransomware. According to one analysis from Chainalysis, three-quarters of the money made through ransomware attacks last year went to hackers linked to Russia. In January, the Ukrainian government was targeted by a series of cyberattacks that disguised themselves as ransomware that demanded bitcoin, before destroying data on government computers.

“Capital flight by economically distressed Ukrainians, or even Russians, is a very different thing than the Russian state attempting to launder money or evade sanctions,” said Alex Zerden, a former Treasury Department official under the Obama and Trump administrations.

Coppi, from the Norwegian Refugee Council, warned that people putting their money in crypto may become unsuspecting victims in cyberwarfare, and not only in the Russia-Ukraine conflict. “Most conflicts are going to be more and more about cyberwarfare,” he said. “You risk becoming a target.”

That being said, it’s not as though other currencies can’t be used for unsavory activities. “US dollars are used for a lot of really great economic activities,” Zerden said. “It’s also used to buy drugs and weapons and, you know, engage in human trafficking, right?”

Bitcoin maybe isn’t digital gold

One of the big arguments that crypto proponents have long made is that cryptocurrencies have the potential to act as “digital gold.” That means that, unlike fiat currencies, bitcoin can’t be diluted because there’s only going to ever be a set number of bitcoin, and that investing in cryptocurrencies is a way to diversify your portfolio in the face of volatility. Theoretically, that’s supposed to mean that bitcoin is a way to hedge against inflation, or that if the stock market crashes, bitcoin won’t. This theory hasn’t entirely proven to be true. Crypto has shown itself to be super volatile, and it often moves with stocks. The current conflict has highlighted crypto’s volatility.

Bitcoin fell when Russia invaded Ukraine, as did the S&P 500 — it didn’t act differently from major US stocks. And as the S&P 500 rebounded later in the week, so did bitcoin.

“That’s removing the perception that people had that cryptocurrencies could be used as a hedging asset against these kinds of macroeconomic conditions,” said Hugh Harsono, a digital currency researcher.

Still, cryptocurrency advocates say bitcoin can be better than the alternatives — like cash, bank accounts, or other physical assets, like gold or real estate — because it’s beyond the control of any one institution and easily transportable. And while crypto may be volatile, it can be less volatile than some countries’ fiat currencies or markets. Earlier this year, the Turkish lira became more volatile than bitcoin, which prompted some people in Turkey to cash in their fiat currency for bitcoin and Tether.

“You’re worried that bitcoin went down 10 percent today or whatever,” Gladstein, from the Human Rights Foundation, said. “What are your other options for Ukrainians? What are they going to do? Put it in the Ukrainian stock market? Are they going to put it in a house? Are they going to bring the house with them?”

Crypto is a part of war now, like it or not

This isn’t the first time people have turned to crypto amid an international conflict, but it does feel like the first time crypto is front and center, so much so that some have even called Russia’s invasion of Ukraine the world’s first crypto war.”

This is largely thanks to crypto proponents who have rallied in support of Ukraine and tried to find a role for crypto. The cryptocurrency exchange FTX, for instance, has given the equivalent of $25 to every Ukrainian user on its platform to use as they please, according to its CEO Sam Bankman- Fried. One of the co-founders of the Russian protest band Pussy Riot, ​​Nadya Tolokonnikova, has organized a fundraising effort to sell 10,000 NFTs of the Ukrainian flag. Vitalik Buterin, the Russian-born founder of ethereum, has encouraged people to donate to humanitarian efforts in the country with crypto.

Of course, some of crypto boosters’ efforts to inject the digital assets into a war effort have been a little cringeworthy. It doesn’t really help for a bored ape NFT person to express solidarity with Ukraine. Given the scamminess of parts of the space, it’s also hard to know which projects are actually going to help people in Ukraine and which ones are just money grabs by opportunists.

For now, we don’t know how crypto will shape international conflict, or whether it will ultimately help or hurt. People fleeing war zones might find a unique use for crypto, but they’ll need to figure out how to use it first. There are already plenty of other ways to raise and move money that don’t involve digital currencies. And while crypto may make it easier to sidestep sanctions, countries were evading sanctions long before bitcoin arrived.

What we do know is that bitcoin and other cryptocurrencies are now a real factor in global economies and in conflicts. Whether it’s good or bad in wartime, crypto is doing what its proponents say it does — giving people a way to work outside of traditional financial institutions — and there’s no sign that will change anytime soon.

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