Stablecoin Might Be Russia’s Preferred Foreign Exchange Medium: Chainalysis
Chainalysis discovered that the use of stablecoins in Russia has grown since the start of the conflict.
A recent analysis reveals that more than 18 percent of all crypto received in Eastern Europe originates from addresses connected with dangerous or illegal activities, a considerably greater proportion than any other location. With Russia’s invasion of Ukraine being the greatest news in the area, both nations have experienced a steady rise in bitcoin transactions.
Chainalysis, a prominent blockchain intelligence business, revealed that crypto may have helped finance Russia’s international commerce after its exclusion from SWIFT.
The Volume of Russia’s Stablecoin Transactions Increases
While the question of whether Russian oligarchs have begun using cryptocurrencies to evade sanctions remains unanswered, an expert believes that certain companies in the country have already begun to execute these transactions, particularly after the Russian central bank legalised the use of cryptocurrencies for international payments.
In a recent research, Chainalysis interviewed a regional specialist on money laundering who has previously collaborated with financial intelligence units in Eastern Europe and many international organisations. The expert said:
“This is probably already happening on a small and medium scale, but it could become more widespread.”
In such a situation, the analyst cited Iran and China as possible trade partners. Notably, the latter’s Trade Ministry has formally authorised the usage of cryptocurrencies in international trade.
Stablecoins may become the favoured means of exchange in Russia, reducing the price volatility of other crypto assets like Bitcoin. Interestingly, Chainalysis discovered a surge in the use of stablecoins in Russia since the beginning of the conflict.
Beginning the year, 42% of transaction volume was comprised of stablecoins, especially for Russian services. The statistics surged to 55% in February and 67% in March after the invasion.
“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.”
Cryptocurrency Trade in Ukraine Against Russia
The transaction volume in Ukrainian hryvnia soared by 121% to a staggering $307 million. The trade volume denominated in Russian rubles increased by 35% to $805 million after the conflict started in March. Surprisingly, the volumes dropped pretty shortly after and haven’t yet exceeded some these highs despite “ebbing and flowing through August.”
The blockchain analytics business speculates that the actual scale of activity may be far greater.
The surges in hryvnia-to-cryptocurrency transactions were attributed to the Ukrainian government’s currency regulations. Tatiana Dmytrenko, a senior advisor in the Ukraine’s Ministry of Finance and a member of the World Economic Forum’s Digital Assets Task Force, said that the country’s central bank put limitations on currency cash transactions after the implementation of martial rule.
In reaction to these regulations, which were loosened in July 2022, some Ukrainians may have traded their hryvnia for cryptocurrency. This matched with Chainalysis’s findings that hryvnia-to-cryptocurrency transactions had decreased.
