War Boosts Crypto Activity In Russia And Ukraine, BlockBlog Chain Analytics Reports


The deadly conflict that began with Russia’s assault on Ukraine has increased crypto-related activity in both countries, according to Chainalysis. Fiat-imposed inflation and sanctions pressure have led to several spikes in transaction volumes this year, the blockchain forensics firm has found, while Eastern Europe as a whole has maintained its role in the ecosystem. crypto world.

Russians and Ukrainians turn to crypto amid fallout from escalating military clashes

The Russian invasion of Ukraine and the ensuing military conflict which is currently escalating has affected all aspects of life in both countries, and cryptocurrency is no exception, Chainalysis said in an excerpt. of its upcoming 2022 report on the geography of cryptocurrency. Citizens of both countries felt the economic impact of the war and experienced high inflation.

Shortly after hostilities began in late February, Russian and Ukrainian cryptocurrency transfers saw an increase. Over the following weeks and months, the trends diverged, and while Russian transactions hovered in a relatively narrow range, perhaps influenced by restrictions on services, Ukrainian transactions rose steadily through June.

War Boosts Crypto Activity in Russia and Ukraine, Chainalysis Reports

In March, just after the start of the war, trade volume denominated in Ukrainian hryvnia jumped 121% to $307 million, while trade volume denominated in Russian rubles rose 35% to $805 million. of dollars. “After that, we see volumes drop for both countries, ebbing and sinking through August, but never reaching their March highs,” the study authors noted.

Amid currency controls introduced under Kyiv’s martial law, including restrictions on cash purchases of US dollars or euros and transfers abroad, some Ukrainians may have sought to exchange their hryvnia holdings against cryptocurrency, according to Tatiana Dmytrenko, a senior adviser. at the Ministry of Finance of Ukraine and a member of the World Economic Forum’s Digital Assets Working Group. Crypto trading volumes declined when these measures were relaxed in July.

Chainalysis cites a money laundering expert who commented on similar activity in Russia, where currency restrictions were also enforced. “The major question not only for the oligarchs but also for ordinary Russians has become: ‘How do you get money out of Russia?'” said the expert who chose to remain anonymous. “Many started looking for new places where they could withdraw their crypto,” he added, citing the United Arab Emirates, Turkey, Kazakhstan and Georgia as jurisdictions where Russians could have found such services.

While crypto markets are barely liquid enough to allow systematic sanctions evasion, researchers say, cryptocurrency could potentially play a role in financing Russia’s foreign trade, after its banks were cut. of the SWIFT global payment messaging network. The expert pointed out that the Central Bank of Russia recently agreed to legalize crypto payments for cross-border settlements and some companies may have already started using digital assets for such transactions. In his opinion, stablecoins would probably be preferred as a medium of exchange because they are not volatile like bitcoin.

Eastern Europe Maintains 10% Share of Global Crypto Transactions, Chainalysis Data Shows

Overall, Eastern Europe is the fifth largest cryptocurrency market with $630.9 billion of value received on-chain between July 2021 and June 2022, just over 10% of activity of global transaction during this period, Chainalysis said. The region’s “comparative role in the world’s largest crypto ecosystem has remained surprisingly constant over the past several years,” while other regions have seen more volatility, the company explained.

“Risky and illicit activity is still predominant when we look at Eastern European on-chain activity: high-risk exchanges – those with no or low KYC requirements – account for 6.1 % of deal activity in the region,” the report further notes. According to compiled data, more than 18% of all cryptocurrency received by Eastern Europe comes from addresses associated with risky or illicit activity, more than any other region, according to Chainalysis.

Keywords in this story

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Do you expect crypto activity in Russia and Ukraine to increase even more if their military conflict escalates further? Share your thoughts on the subject in the comments section below.

Lubomir Tassev

Lubomir Tassev is a tech-savvy Eastern European journalist who loves Hitchens’ quote: “Being a writer is who I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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