War Bonds, NFTs And Crypto: How Ukraine Is Funding Its Defense

A bare-bones office above a bakery in north London was the hub of the newest effort to raise money for Ukraine.

The 23-year-olds Isaac Kamlish, Nathan Cohen, and Isaac Bentata huddled around their laptops earlier this week to assist launch the first-ever sale of one-of-a-kind digital treasures by a national government.

Kyiv sold almost 1,200 non-fungible tokens, or NFTs, in less than 24 hours, using technology invented by the three, raising roughly $600,000 to assist fund its defence against Russia.

One of the playbooks was from a bygone era. War bonds given to individuals and organizations in Ukraine have brought in around $1 billion, demonstrating residents’ readiness to lend to the government even if they don’t know if they’ll get their money back in full.

According to analytics firm Chainalysis, President Volodymyr Zelensky’s administration has also urged would-be donors throughout the world to directly send bitcoins, raising more than $56 million. Collectors from Los Angeles to Barcelona flocked to the NFT sale on Wednesday, hailing it as a watershed moment for both Ukraine and the crypto world.

“The Ukraine war is horrible, and it will go down in history,” said Ben Jacobs, co-founder of digital asset investment firm Scenius Capital. “This application of cryptography is historically significant in and of itself.”

Jacobs, who is headquartered in Venice Beach, California, purchased two NFTs for a total of $1,100, including modest transaction costs. Ukraine’s government received almost $1,000 in ether, a cryptocurrency commonly used for NFT purchases.

A Fundraising Rush

People in Europe and the United States have been flying blue and yellow flags on buildings, holding local fundraisers, and changing their social media avatars to show their support for Ukraine.

But more than words and gestures are required by Zelensky’s squad. Kyiv needs money,  a lot of it to keep its government running and equip its military. The battle is expected to cost the country $565 billion, according to estimates. In 2020, its economic output was $155 billion.

“Our fiscal imbalance is significantly greater than we thought when we started this year,” Ukraine’s commissioner for public debt management, Yuriy Butsa, told CNN Business.

To assist bridge that gap, the administration has started an extraordinary push to raise money for its cause on a worldwide scale in the five weeks since Russia’s invasion.

“These guys are being innovative,” said Viktor Szabo, a fund manager at the UK-based investment firm Abrdn which specializes in emerging market debt.

To raise funds, Kyiv has relied on tried-and-true methods. Ukraine has already received $4 billion in emergency funding from multilateral agencies such as the International Monetary Fund and the World Bank, and another $2 billion is being discussed.

It’s also using traditional war bonds, which governments issue during a fight to elicit citizen support. They also aid in the fight against inflation by removing cash from circulation at a time when product shortages are common.

In March, Ukraine generated approximately $1 billion through five sales of local currency bonds. According to Butsa, there was a lot of interest from both institutions and individuals. The money goes into the government’s coffers, which are subsequently used to pay for things like pensions and emergency services.

“A lot of people are buying this instrument for $10,000 or $5,000,” Butsa remarked.

In today’s market, buying these bonds needs a leap of faith. The yield on one-year notes issued last month was 11%, indicating a very high level of risk. If Zelensky’s administration is overthrown or exiled, or the Ukrainian economy is devastated by a long war, payback is unlikely.

Shortly after the invasion, S&P Global Ratings downgraded Ukraine’s credit rating. While it expects the international community will assist Ukraine in meeting its funding needs over the next 12 months, it warns that there is a possibility of “governance disruptions, putting commercial debt servicing at risk.”

Butsa stated that Ukraine’s government is currently working “round the clock” with its bankers to develop a new dollar bond that could be sold to foreign investors, many of whom are eager to support Kyiv but are hampered by capital controls that prevent them from receiving returns in Ukrainian currency, as well as other logistical issues.

“Our objective is to provide [an] instrument through which anyone in the United States who wants to help Ukraine and has a bank account with a local financial institution may easily support us,” Butsa said. His group is also looking into possibilities within the European Union.

Despite their sympathy for Ukraine, professional investors who have a responsibility to protect their customers’ money may be hesitant to lend money to the Ukrainian government at this time, even if it can find a method to market bonds abroad.

Working The Crypto Angle

Since Ukraine is leery of dramatically growing its debt load, non-borrowing financing solutions are also intriguing.

“We don’t want to end up spending more on debt payment than we do on restoring infrastructure when the battle moves into the reconstruction phase,” Butsa said.

This is when cryptocurrency donations and NFT sales come in handy. Ukraine has been encouraging people to send bitcoin and other cryptocurrencies through its social media accounts for weeks. The effort has provided the government with access to a big pool of small donors who aren’t concerned with complicated financial arrangements or currency translation.

According to Chainalysis, as of March 28, Kyiv had raised $56 million in cryptocurrency, with a median gift of about $30. The money was used to buy protective jackets, helmets, walkie-talkies, and medicine, according to Alex Bornyakov, Ukraine’s deputy minister of digital development.

UkraineDAO, an initiative funded by a member of the Russian activist group Pussy Riot, collected more than $6.7 million by selling an NFT of Ukraine’s flag.

The official NFT auction kicked off a new phase in the endeavour this week. Supporters from all over the world bought digital artwork created by local artists that mixed vibrant visuals with combat artefacts like tweets.

Kevin Lista Navarro, a 26-year-old financial adviser from Barcelona, has previously given to help Ukrainian refugees. Despite this, he saw the NFT auction as a once-in-a-lifetime opportunity and purchased two.

“Now, thanks to this technology, you can contribute to the cause while simultaneously receiving a memorable work of art,” he explained. “No one knows how much they’ll be valued in the future.”

When cold emailing people in the Ukrainian government after the NFT initiative was first announced, Kamlish, Cohen, and Bentata the London team whose embryonic platform,, was utilized to handle the sale got the job. They’ve been working on the launch for the past two and a half weeks, staying up late and running on adrenaline.