Crypto Thrives in war-torn Ukraine and sanctions-hit Russia: Chainalysis

Ukraine and Russia, which 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 report by Chainalysis shared CryptoPotatoRussia rose six places compared to last year’s ranking. This achievement occurred amidst the ongoing war and intensifying sanctions from Russia. Meanwhile, Eastern Europe led the way with $182.44 billion worth of crypto inflows to Russia, while Ukraine followed with $106.1 billion.

Russian and Ukrainian DeFi Growth

Chainalysis found decentralized exchanges (DEX) across Eastern Europe saw a significant increase in crypto inflows, led by Ukraine and Russia.

Regionally, DEX platforms received approximately $149 billion in crypto, with Ukraine’s DEX inflows growing more than 160% to $34.9 billion and Russia’s by more than 173%, reaching $58.4 billion. DeFi lending services in Moldova, Hungary and the Czech Republic also saw substantial growth, receiving $11.29 billion worth of digital assets.

Over the past year, the size of DeFi transactions in Ukraine and Russia revealed two main trends. Ukraine saw a massive 361.49% increase in large institutional transactions, defined as transactions above $10 million. This group drives most of its DeFi activity.

Russia, along with Belarus, Poland, and Slovakia, are also experiencing significant DeFi growth through large institutional transfers.

Ukraine however saw a significant increase in both large and small retail transactions, with growth of 82.29% and 91.99% respectively. These smaller transactions indicate grassroots adoption of crypto, likely reflecting investors’ efforts to use crypto for everyday spending as Ukraine faces geopolitical challenges and recovering inflation.

Sanctions Drive Growth of No-KYC Crypto Platforms in Russia

Local crypto services in Russia continue to grow in popularity, with large inflows from both within and outside the country. In fact, Chainalysis revealed that web traffic to centralized exchanges remained flat, but Russian-language non-KYC exchanges experienced a peak in activity last year and have since stabilized.

This increase is most likely related to sanctions against Russian banks, thereby encouraging local residents to use these platforms to convert their fiat money into cryptocurrencies.