According to a new analysis from blockchain intelligence company Chainalysis, after the Russian invasion of Ukraine, stablecoin adoption in Russia increased significantly. Since then, the country has been affected by western sanctions and high inflation. The data, which was published on October 12, showed that since the invasion, the share of stablecoin's transaction volume on mostly Russian services has climbed from 42% in January to 67% in March. Chain analysis suggests that after being dropped from SWIFT, Russia may have used cryptocurrency to finance its international trade.
Unnamed expert on regional money laundering told Chainalysis that due to the price stability of stablecoins, cross-border cryptocurrency use is anticipated to increase as a result of Russia's withdrawal from the SWIFT cross-border system.
According to the research, some of the rise in stablecoin usage is probably the result of regular Russian citizens exchanging their RUB for stablecoins to preserve the value of their possessions in the face of the country's high inflation rate since the conflict started.
The study stated: "While some of that may be due to corporations embracing cryptocurrency for cross-border transactions, it's also possible that some of the increase is due to ordinary Russian people trading for stablecoins in order to protect the value of their assets, as we previously highlighted."
While the Russia-Ukraine war is ongoing, Chainalysis also pointed out that Eastern Europe has the highest concentration of "high risk" crypto activity worldwide.
According to Chainalysis, Eastern Europe has the fifth-largest regional cryptocurrency market, with value received on-chain between July 2021 and June 2022 totaling $630.9 billion (about Rs. 51,93,900 crore). That accounts for 10% of all transactions that took place globally throughout the study period, which is roughly in line with previous results.
According to the report, the greatest percentage of any region assessed by Chainalysis, 18% of crypto activity in Eastern Europe is connected to "risky or criminal" behavior. Although the bloc's rate of illicit transactions is lower than that of sub-Saharan Africa and Latin America and on par with North America, it comes mostly from transactions deemed hazardous.
The proliferation of "high-risk exchanges," which have little to nonexistent know-your-customer (KYC) information rules, is a significant contributor to the region's high rate of dangerous activity. According to the research, these exchanges account for around 6% of transaction activity in the region, vs 1.2 % for the next-closest region.
Sanctions imposed in response to the invasion of Ukraine are preventing residents of Russia, the largest nation in Eastern Europe, from using many international crypto services and may be driving them toward riskier services. Last week, the EU further strengthened its controls on cryptocurrency transactions in Russia by outlawing all cryptocurrency wallets, accounts, and custodial services there.
