According to the report of an expert in the field of international financial law Konstantin Krypopust The Central and South Asia and Oceania (CSAO) region dominates the latest Chainalysis ranking by the level of adoption of cryptocurrencies in 2024 – seven of the TOP-20 countries are located in this region and demonstrate a high level of activity on local crypto exchanges, trading services and decentralized finance.
The most interesting ones are collected below reportin particular analytical data on Eastern Europe and Ukraine.
According to Chainalysis, global crypto activity is on the rise – between the fourth quarter of 2023 and the first quarter of 2024, the volume of crypto transactions in the world exceeded the figures of 2021.
TOP-20 countries by the level of adoption of cryptocurrencies
Last year, the growth in the adoption of cryptocurrencies took place mainly in lower-middle income countries. However, this year cryptocurrency activity has increased in countries of all categories.
The launch of Bitcoin ETFs in the US in early 2024 has had a significant impact on the growth of crypto-activity in all regions, especially high-income ones such as North America and Western Europe. At the same time, stablecoin transactions have increased in low-income and lower-middle-income countries, particularly in regions such as sub-Saharan Africa and Latin America. DeFi activity, in turn, has grown significantly in sub-Saharan Africa, Latin America, and Eastern Europe.
Implementation of cryptocurrencies in Eastern Europe and Ukraine
Despite the war and regulatory issues, cryptocurrency adoption is growing in Eastern Europe thanks to institutional and DeFi activity.
As the fourth largest crypto market, Eastern Europe received $499.14 billion worth of crypto assets between July 2023 and June 2024, or 11% of the world’s total crypto transactions. Most of the assets in the region were transferred through centralized exchanges — almost $324 billion, the DeFi segment also grew last year — to $165.46 billion.
Ukraine took the second place in the region and the sixth place in the global ranking by the level of adoption of cryptoassets – the country received $106.1 billion in cryptocurrency. The terrorist country Russia became the leader in Eastern Europe.
The report notes that institutional and professional transfers contributed to the significant growth of the crypto market in Ukraine. As the representatives of the WhiteBIT crypto exchange operating in Ukraine clarified in a comment, institutional and professional transfers in Ukraine have increased, as investors are looking for financial stability against the background of the war, and cryptocurrencies are seen as a safer alternative. This trend is driven by global factors such as market volatility, inflation and growing institutional interest in Bitcoin ETFs.
The volume of transactions for the purchase of BTC for the Ukrainian hryvnia is increasing – an analysis of requests for the purchase and sale of the asset shows that this indicator amounted to $882.64 million last year. This happened after the peak of inflation in the hryvnia at 26.6% in December 2022 and against the background stable decline in inflation in the first quarter of 2023. As consumer purchasing behavior typically lags behind economic trends, Ukrainians may have viewed BTC as an alternative to the hryvnia, the Chainalysis report noted.
The activity of the DeFi segment in Eastern Europe last year increased by almost 40% compared to the year before and accounted for more than 33% of the total volume of cryptocurrencies received by the region. Globally, Eastern Europe ranked third behind Latin America and Sub-Saharan Africa in terms of DeFi growth.
In Eastern Europe, Decentralized Exchanges (DEX) recorded the largest growth in cryptocurrency inflows — especially in Ukraine, Russia, Poland, and Belarus. Across the region, DEXs received $148.68 billion in cryptocurrency. And countries such as Moldova, Hungary and the Czech Republic have also noted the growth of DeFi lending services. The NFT segment also grew in some countries, but accounted for only $6.9 million of total DeFi revenues in Eastern Europe.
The tokenized smart contract category (ie those using ERC-20 tokens as well as popular stablecoins such as USDT and USDC) saw a notable decline in all Eastern European countries, reflecting the regional decline in stablecoin transactions. Most other regions, on the contrary, have seen steady growth in the use of these assets. This may indicate that regulatory uncertainty and geopolitical tensions may be contributing to Eastern Europe’s shift away from stablecoins.
It is noted that the volume of large institutional transactions (that is, those exceeding $10 million) in Ukraine increased by 361.49%. This led to the growth of the DeFi segment. At the same time, large retail transactions (from $1,000 to $10,000) and small retail transactions (up to $1,000) in Ukraine increased by 82.29% and 91.99%, respectively. Small retail transactions usually indicate mass adoption, and given the region’s geopolitical instability and Ukraine’s recent recovery from inflation, small transactions may demonstrate that investors are increasingly using cryptocurrency to make purchases.
The future of cryptocurrency in Ukraine
Last summer, the EU started implementing the Regulation of Cryptocurrency Markets (MiCA). On December 30, 2024, MiCA will be fully applicable to all crypto-asset providers in the EU.
Ukraine is also working on the implementation of MiCA standards in view of its integration into the EU. “The introduction of blockchain technology and the integration of crypto-assets into the legal framework can be a major step forward for Ukraine’s efforts to support its economy, especially during the ongoing war with Russia,” said Oleksandr Bornyakov, Deputy Minister of Digital Transformation of Ukraine for IT Development. “A regulated crypto-economy can generate tax revenue, attract and retain startups, and position the country as a competitive player in the global digital economy. Well-designed crypto legislation will help bring the crypto industry out of the so-called gray area and into a legal framework, increasing legitimacy and trust in this emerging market.”
With a multi-million population with a high level of IT literacy, continuous digitization in the country, strong technological ecosystems and a desire for innovation, Ukraine has the potential to become a key player in Eastern Europe in terms of the development of the field of digital assets.
