In Georgia, crypto is a crucial tool for refugees escaping the war – Cointelegraph Magazine

Cointelegraph Magazine

In late February, just days after Russian troops invaded Ukraine, I arrived in Tbilisi, Georgia, near Russia’s southern border. I have been covering cryptocurrencies and blockchain in St. Petersburg, but after the war started, it was no longer tenable to stay there. During my first week in town, I looked for an apartment to rent and a way to open a basic bank account.

I went to a major branch of the Bank of Georgia, the second largest private bank in the country, right next to Liberty Square in the city center. The bank had only opened for an hour, and it was already crowded with people waiting to see the banker.

When I entered, a visibly exhausted teller at the help desk asked me bluntly: “Russian?” I said no, but I wanted to open a bank account. She handed me an application form, a numbered receipt paper, and told me to wait for my turn.

While I was waiting to fill out the bank application form, I noticed that people with red passports (i.e. Russian passports) did not receive the application form. I watched Russian clients approach the bank window. Everyone receives a long list of documents that must be presented in order to open a standard bank account with a debit card. The list includes six months’ worth of transaction records, passport translations and copies of work contracts.


I’m starting to worry because as far as I know from my own research, none of this was necessary before. As I approached the window, the banker instinctively reached for a copy of the list of required documents—until I showed my American passport. In less than half an hour my application was processed and the banker told me to stop the next day to get my card.

please file your

Money matters further complicate the lives of Russians and Belarusians who come to Georgia to escape harsh repression at home. Telegram channels dedicated to expat Russians are filled with questions about how and when people will be able to move money.

Sanctions from major banks, payment companies and card issuers such as Mastercard and Visa, combined with strict capital controls at home, have made it nearly impossible for Russians in Georgia to tap their savings in Russian banks.

Their banks in Georgia are facing further difficulties, where once relatively lax requirements to open a bank account have been replaced by intensive “know your customer” procedures for hopeful customers.

Reports from some banks have appeared on social media asking applicants from Russia and Belarus to swear that Russia is an aggressor in an illegal war against Ukraine, recognize Abkhazia and South Ossetia as part of Georgia, and swear to resist propaganda.

Given recent laws on “anti-Russian propaganda” and the dissemination of misinformation about Ukraine’s “special operations,” signing such a declaration could be a crime if the signatories return to Russia.

Cryptocurrency without problems

Some Russian friends who knew my work in crypto media asked me if there was any way to access their funds using crypto.

Buying cryptocurrencies in Russia is still largely unregulated, and small exchanges only require very basic KYC procedures if they require it. And since any transactions via bank cards still take place within Russia, residents don’t have to worry about sanctions from credit card companies when buying cryptocurrencies on local exchanges.

These small exchanges quickly caught up with the surge in demand, with many selling major tokens like bitcoin and popular dollar-based stablecoins like Tether at a premium, some well above their adjusted dollar value.

But smaller, less popular coins like Litecoin are still relatively reasonable at initial prices two weeks after the outbreak of war. A friend transferred most of his savings into Litecoin via a Russian online exchange. Once their mobile wallet notified them that they had received LTC, they headed straight to one of several brick-and-mortar cryptocurrency exchanges in Tbilisi to sell their coins for USD.

I risked myself going to one such exchange to sell some ether for cash. On its website, the company maintains its apolitical status and complies with Georgian law. I’m not sure what I’ll see when I arrive, but what I found was a rather humble thing.

The small room in the crowded office building in the city center has two desks and a few chairs for customers to relax while doing block confirmations. In a single window, neon Bitcoin, Litecoin and Tether logos glow. Miniature Georgia and Ukraine flags tucked into potted plants.

When I arrived, a small group of Russian-speaking customers was leaving, thanking the two staff sitting at their respective desks. The staff asked how they could help me and I said I wanted to sell some cryptocurrency.

which type? ether. How many? Worth about $2,500.

They gave me an address and I sent cryptocurrency. After confirming the transaction, the money counter whizzed past, spitting out the exact dollar amount, and the staff carefully counted again on the desk in front of me. The whole process takes about 10 minutes.

No one ever asked about my nationality, ID or business in Tbilisi.

With dollars in hand, I chatted with the staff. The exchange operator, speaking on condition of anonymity, said the vast majority of their customers in recent weeks have been Russian or Belarusian, and the flow of customers has been more or less uninterrupted.

This is just one of several brick-and-mortar cryptocurrency exchanges in the Georgia capital that maintain laissez-faire laws on cryptocurrencies. It has no licensing scheme for crypto trading, and crypto traders do not have to pay taxes on income or gains. Sales of cryptocurrencies and hashing power abroad and domestically are also exempt from VAT in the country.

no russians

The capital of more than 1 million inhabitants is finding it difficult, both materially and politically, to absorb the thousands of new immigrants from Ukraine, Belarus, and especially Russia.

While many of the city’s cryptocurrency-focused businesses have a “live” approach to customers, many other businesses and services are downright discriminatory.

As an example: the majority of residential rental properties in the city are in Weeks before and after the conflict began.Now, more than a monthFor the war, there were few options for the Russians who still arrived.

In addition to supply issues, Russians also face discrimination from landlords. The first question I always face when contacting real estate agents in town, even Americans, is, “Are you Russian?” – and then something like, “We need to check your Passport before you can move on.” Several real estate agents I spoke with said landlords had a “no Russians” policy.

At a local cafe, I overheard an exasperated Russian on the phone with what I thought was a real estate agent. He rattled off a list of requirements—such as the number of bedrooms, price range, need for a stove and washing machine—that he desperately wanted to find:

“My wife and I are renting a room in the city center right now and she’s hysterical. She said there was no place to cook, no washing machine to wash our clothes. She said she wanted to go back. I said, ‘What do you mean by going back? We can’t Go back, nothing. We’re here…'”

While I can’t approve of this outright discrimination, I can understand how it came about.

In 2008, Russia supported separatists in the Georgia breakaway regions of Abkhazia and Tskhinvali (now known by many as South Ossetia). The ensuing war in August 2008 lasted 12 days, with many areas bombed and scarred. Years later, the conflict has left the Georgian people with a strong sense of solidarity with Ukraine and a strong distaste for Russia.

tools, not solutions

Almost all Russians I met in Tbilisi used cryptocurrencies to move at least some of their savings. While this initially seemed like a success story — giving people control over their savings when cryptocurrencies shined as the decentralized future — I think it’s important to narrow down.

Like any other technology, cryptocurrencies are only as good or as useful as the people and human institutions that surround and implement them. While many libertarian-minded crypto-supremacists in the Russian-Georgian context will no doubt praise the technology and its apolitical design, the only thing that makes it successful is connecting the traditional financial system with blockchain People and businesses on both ends of the transaction – based, decentralized.

If the Russian government requires exchanges to implement stronger KYC protocols—as they do with bank accounts and foreign currency exchanges—citizens will not be able to buy cryptocurrencies, or the amount they can buy and subsequently save will be severely limited.

If the Georgian government requires exchanges to follow the same strong and nearly impossible KYC measures that private banks are currently implementing, it will be very difficult for Russian immigrants to sell their cryptocurrencies to pay rent, buy food and organize transportation.

If exchange operators allow their political stance to dictate their customers, the cryptocurrency-owning public may find their options to buy, sell, and withdraw assets further limited.

Like most other new technologies, cryptocurrency has been lauded as apolitical or neutral because of its creation, becoming politicized in the hands of those who use and regulate it.

Aaron Wood is an editor at Cointelegraph with a background in energy and economics. He pays close attention to the application of blockchain in building smarter and fairer energy access around the world.

The views expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph or its affiliates. This article is for general informational purposes only and is not intended and should not be considered legal or investment advice.

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