After Russia launched a military assault on Ukraine early this year, both countries are seeing a rise in crypto-related transactions.
This comes after Chainalysis released its 2022 report, Geography of Cryptocurrency. As a result of the ongoing conflict, citizens from both sides are going through poor economic conditions due to high inflation.
The rate of crypto transfers saw an increase around late February, shortly after the attack. As months followed, Russian transactions fluctuated and began to slow down.
This is most likely due to the restrictions and sanctions placed on the country. Meanwhile, crypto transfers to and from Ukraine increased in June.
Both Countries’ Fiat Currencies Trade Volumes See Massive Drop
Back in March, trade volume for Ukraine’s Hryvnia grew by 121 percent, reaching levels of $307 million. Meanwhile, the Russian Ruble saw a spike of 35 percent, reaching an impressive level of $805 million. However, volumes for both currencies dipped after that.
Through August, the levels came up and down, but they failed to reach the same March high. In Kyiv, martial law led to strict currency controls like restrictions on the purchase of USD, as well as transfers abroad.
Consequently, it’s likely that some Ukrainians looked into exchanging their currency for digital currency. Once such measures were dropped in July, crypto trading volumes steadily dropped.
Russians Looking To Cash Out Their Crypto
An anonymous expert on money laundering commented that such activity was observed in Russia as well, where citizens faced similar currency restrictions. This led everyone to wonder how they could get their money out of the country,
As a result, many Russians started looking for places where they could exchange their cryptocurrencies.
Despite the sanctions placed on currency transfers, Russians found lenient jurisdictions like Georgia, Kazakhstan, Turkey, and the UAE.
Although the crypto market isn’t liquid enough to help support a country in evading the effects of global sanctions, the cryptocurrency did prove helpful in financing foreign trade in Russia.
This was after the country’s banking institutions were removed from SWIFT, the global financial messaging system.
Eastern Europe Is Fifth-Largest Crypto Market
As of now, Eastern Europe ranks fifth among the world’s biggest crypto markets. Between July 2021 and June 2022, the region received $630.8 billion over the chain. That’s a little over 10 percent of the world’s crypto transactions in that period.
According to Chainalysis’ report, over the past few years, Eastern Europe has maintained its role in the global crypto ecosystem. In contrast, other regions are experiencing much more volatility.
Nevertheless, there’s still a lot of illicit and risky crypto-related activity going on in the region. Exchanges without any KYC requirements make up over 6 percent of the region’s transactions.