Crypto is booming in war-torn Ukraine and sanctioned Russia

Chainalysis recently published their latest edition of the Global Crypto Adoption Index, which ranks the countries leading the world in crypto adoption.

This year, Ukraine and Russia stand out, taking 6th and 7th place respectively. Both countries are strengthening their position as major players in the global crypto market, and this is partly attributed to the rise of Decentralized Finance (DeFi). But what exactly is behind this growth?

Russia rises six places: DeFi drives adoption

Russia has risen six places in the rankings this year, a remarkable achievement considering the ongoing war with Ukraine and the strict international sanctions affecting the country. In the past year, Russia received $182.44 billion in crypto, while Ukraine received $106.1 billion.

The increase in DeFi activity plays a crucial role in this development. The report shows that inflows to decentralized exchanges have increased sharply in Eastern Europe, with Russia and Ukraine leading the way. Around $149 billion was sent to DeFi platforms across the region. Russia saw a 173% increase in DeFi inflows, while Ukraine reported 160% growth.

Institutional growth in Ukraine

What is striking is the growth of large institutional transactions in Ukraine, which increased by no less than 361%. This indicates that institutional donations in crypto are driving a significant portion of DeFi activity. Growth can also be seen at the level of retail investments: small retail transactions increased by 82%, while large retail transactions increased by 92%. This shows that crypto is becoming more widely accepted among the Ukrainian population.

Sanctions send Russians to crypto

In Russia, the use of crypto platforms without Know-Your-Customer (KYC) verification has increased significantly. These platforms have become more popular due to the sanctions that have hit the country since the outbreak of the war with Ukraine. These restrictions have made access to banks more difficult for many Russian citizens. While usage of centralized exchanges remained stable, no-KYC exchanges saw a sharp spike in activity.

The rise in crypto use in Russia appears to stem directly from the population’s need to convert fiat money into crypto, now that banks are limited by international sanctions. This underlines how crypto is playing an increasingly important role in times of economic uncertainty and geopolitical tensions.