Crypto Thrives in War-Torn Ukraine and Sanctioned Russia: Chainalysis

Ukraine and Russia, ranked 6th and 7th in this year’s Global Crypto Adoption Index, stand out as key players in the global crypto economy.

According to the latest Chainalysis report shared with CryptoPotatoRussia notably gained six places compared to last year’s ranking. This feat comes against a backdrop of ongoing war and intensifying sanctions imposed by Russia. Meanwhile, Eastern Europe led the way with $182.44 billion in crypto inflows to Russia, while Ukraine followed with $106.1 billion.

DeFi Growth in Russia and Ukraine

Chainalysis has found that decentralized exchanges (DEXs) across Eastern Europe have seen a significant increase in crypto flows, led by Ukraine and Russia.

Regionally, DEX platforms received approximately $149 billion in crypto, with Ukraine’s DEX flows growing by over 160% to $34.9 billion and Russia’s by more by 173%, to reach $58.4 billion. DeFi lending services in Moldova, Hungary, and Czechia also saw substantial growth, receiving $11.29 billion in digital assets.

Over the past year, the size of DeFi transactions in Ukraine and Russia reveals two major trends. Ukraine saw a massive 361.49% increase in large institutional transactions, defined as those exceeding $10 million. This cohort generated the bulk of its DeFi activity.

Russia, along with Belarus, Poland and Slovakia, have also seen notable growth in DeFi thanks to large institutional transfers.

Ukraine, however, saw a significant increase in large and small transactions, with growth of 82.29% and 91.99%, respectively. These smaller transactions suggest popular adoption of crypto, likely reflecting an effort by investors to use crypto for everyday spending as Ukraine faces geopolitical challenges and resuming inflation.

Sanctions Fuel Growth of No-KYC Crypto Platforms in Russia

Local crypto services in Russia have been steadily growing in popularity, with significant influxes from both inside and outside the country. In fact, Chainalysis revealed that web traffic to centralized exchanges remained stable, but Russian-language KYC-free exchanges saw a spike in activity last year and have since stabilized.

This increase is likely linked to sanctions imposed on Russian banks, prompting residents to use these platforms to convert their fiat currencies into cryptocurrency.