A year after the start of the war in Ukraine, Chainalysis has returned to the place of cryptocurrencies within the conflict. Let’s take stock of these new cases of applications in such a situation.
The role of cryptocurrencies in the war between Russia and Ukraine
It has now been a year since Russia began its invasion of Ukraine, and as we have seen throughout 2022, cryptocurrencies have invited themselves into both camps for various application cases.
At the start of the fighting, some regulators worried about the role cryptos could play as a tool for Russian oligarchs escape international sanctions. If a fraction of their fortune could hypothetically have been concealed in this way, the billions at stake were far too large to be absorbed by the capitalization of our ecosystem. This scenario was quickly ruled out.
Besides, many exchanges have closed their services to Russian userswhich did not fail to raise questions about the legitimacy of these measures.
Anyway, Chainalysis investigated the daily volume received by Russian platforms, and did not note any particular aberrations. Indeed, activity peaks are due to various events that have marked our ecosystem, such as with the FTX crash:
Figure 1 โ Volumes received by Russian exchanges
With regard to the financing of paramilitary organisations, Chainalysis has identified $5.4 million donated to 100 groups supporting Moscow. While some of these donations had already started to flow in before the start of the war, the majority of the financing took place during the first half of 2022, before running out of steam thereafter:
Figure 2 โ Cryptocurrency donations to Russian military groups
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The balance sheet on the Ukrainian side
While cryptocurrencies have indeed been able to play a role on the Russian side, their impact is all the more marked for Ukraine. The official addresses of Volodymyr Zelensky’s government received $56 million in March 2022, and donations continued to flow. to bring it all today to nearly $70 millionmainly in BTC and ETH:
Figure 3 โ Cryptocurrency donations to Ukraine
Last summer, the Ukrainian government detailed the purchases made thanks to these donations, in particular arms and computer or medical equipment.
Moreover, the conflict has pushed Ukrainians to adopt cryptocurrencies much faster than in the rest of the world. This places the country #3 in Chainalysis’ Global Crypto Adoption Index in 2022behind Vietnam and the Philippines.
Interestingly, while centralized platforms saw Russian and European user numbers decline last year, the opposite trend was seen for Ukrainians:
Figure 4 โ Origins of centralized platform users
While it must be remembered that the place of cryptocurrencies remains marginal in this war when we put them into perspective given the magnitude of the situation, it is nevertheless important to emphasize that use on such a scale in an armed conflict is unprecedented.
๐ Read also โ The Bank of Russia announces the pilot phase of its digital ruble for next April
Source: Chainalysis
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I timidly discovered the world of blockchain at the end of 2018 during my quest for financial freedom. Initially invested moderately, it was only two years later that I took the gamble of betting everything on the movement that was taking shape then. I then dedicate 2021 to training myself better to acquire more knowledge and seriousness. As I often like to say: I still have a billion things to learn. And what I do know, I want to share with you.
Vincent Mayor
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