Russian Stablecoin Usage Rises Since Start of War
Since the war began, stablecoin usage in Russia has increased, according to Chainalysis.
The new study is a reminder that even in times of political turmoil and economic uncertainty, there are still opportunities to be found in the world of cryptocurrency. For investors in Eastern Europe, the study provides valuable insights into where the region's digital currency is coming from and where it is going. With the region's biggest news being Russia's invasion of Ukraine, the study's findings could help to shed some light on the potential impact of the conflict on the region's digital currency scene.
Chainalysis' findings suggest that cryptocurrencies may have helped finance foreign trade for Russia following its removal from the SWIFT system. This is a positive development, as it shows that blockchain technology can be used to facilitate international commerce even in the face of sanctions.
Russia's Stablecoin Transaction Volume Spikes
While the question of whether Russian oligarchs are using crypto to evade sanctions remains unanswered, one expert believes that some companies in the country have already begun executing such transactions. This comes after the Russian national bank legalized crypto usage for cross-border payments.
In a new report, Chainalysis spoke with a regional money laundering expert who had previously worked with financial intelligence units in Eastern Europe in addition to several international organizations. He was quoted saying, " Eastern European cryptocurrency users are increasingly turning to decentralized exchanges (DEXs) to trade crypto assets." This shift could be attributed to the fact that DEXs are harder for law enforcement to track than centralized exchanges. The expert also noted that "privacy-focused coins," such as Monero and Zcash, are becoming more popular in the region.
“This is probably already happening on a small and medium scale, but it could become more widespread.”
The expert's opinion highlights the potential for Iran and China to become trading partners. It is significant that China's Trade Ministry has officially allowed the use of cryptocurrencies for foreign trade. This suggests that there is growing interest and acceptance of cryptocurrencies as a means of exchange. This could prove to be a boon for Iran, which has been looking for alternative trading partners since the US withdrew from the nuclear deal.
As tensions continue to mount between Russia and the West, it's interesting to note that stablecoins could be playing a role in the conflict. According to Chainalysis, there has been an increase in stablecoin usage in Russia since the start of the war. This suggests that Russians may be using these digital assets to avoid the price volatility of other cryptocurrencies, such as Bitcoin. While it's still early days, it's possible that stablecoins could become the preferred medium of exchange for Russia.
As the year begins, stablecoins transaction volume is high, mostly due to Russian services. However, after the invasion, the figures skyrocket to 55% in February and 67% in March. This indicates that many people are using stablecoins to buy and sell goods and services, possibly due to the instability of the national currency. This trend is likely to continue in the coming months as the economic situation in the country remains uncertain.
“While some of that may be due to businesses embracing cryptocurrency for international transactions, it’s also likely that some of the increase is due to ordinary Russian citizens trading for stablecoins in order to protect their assets’ value.”
Crypto Trade in Ukraine vs Russia: Which Country is Leading the Way?
It is interesting to see that the trade volume between Ukraine and Russia increased significantly after the war began in March. However, the volume soon dropped and has not yet reached the high levels seen earlier. This may be due to the ongoing tensions between the two countries.
There is no doubt that blockchain technology is revolutionizing the way we interact with the digital world. However, its true potential is still largely untapped. The blockchain intelligence company Blockseer is one of the pioneers in this field, and they believe that the exact scale of activity could be much higher.
The recent spikes in hryvnia-for-crypto trading are speculated to be due to currency controls established by the Ukrainian government. Tatiana Dmytrenko, a high-ranking adviser in Ukraine’s Ministry of Finance and member of the World Economic Forum’s Digital Assets Task Force, said the country’s central bank imposed restrictions on currency cash transactions after the introduction of martial law. While the reasons for the spikes in trading are not yet clear, it is notable that the Ukrainian government has taken steps to control the flow of currency in and out of the country. This could have a significant impact on the cryptocurrency market in Ukraine, and it will be interesting to see how the situation develops in the coming weeks and months.
As the Ukrainian government relaxes its stance on cryptocurrency trading, we expect to see a corresponding decrease in hryvnia-for-crypto trading. This is in line with data from Chainalysis, which shows a decline in such activity in recent months.
As the world increasingly moves towards digital currencies, it is no surprise that countries are also investigating the use of such assets for international trade. According to a recent report by Chainalysis, Russia is considering using a stablecoin for foreign trade.