Following the Russian invasion of Ukraine, Russia has experienced a spike in stablecoin use, which has since been subjected to Western sanctions and steep inflation, according to a new report from blockchain security company Chainalysis. On October 12, the share of stablecoin''s transaction volume on mostly Russian services increased from 42 percent in January to 67% in March, and has continued to increase since. Crypto may have also helped in financing foreign trading for Russia following its removal from SWIFT.
Chainalysis is concerned that Russia''s removal from SWIFT, a cross-border crypto system, will be used for cross-border transactions, with stablecoins expected to be the preferred exchange due to their price stability.
In the wake of the high levels of inflation since the war, some of the rise in stablecoin use is likely to be caused by ordinary Russian citizens trading the RUB for stablecoins in order to protect their assets.
While some of these concerns might be attributed to international transactions, it''s also probable that some of the increase is due to ordinary Russian citizens trading for stablecoins in order to protect their assets'' value, according to a report.
In the midst of the Russia-Ukraine conflict, Chainalysis also noted that crypto activity is determined as high risk in Eastern Europe is more prevalent than in any other region.
According to Chainalysis, Eastern Europe is the fifth largest regional cryptocurrency market, with $630.9 billion (roughly Rs. 51,93,900 crore) in value received on-chain between July 2021 and June 2022. This represents ten percent of global transaction activity during the period studied, which is relatively in line with previous performances.
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According to a study, about 18 percent of Eastern Europe''s crypto activity is associated with "risky or illicit" activity, indicating that it is the highest rate of any region measured by Chainalysis. Despite, transactions considered risky with the bloc''s rate of illicit transactions below sub-Saharan Africa and Latin America and on the other hand North America.
The prevalence of high-risk exchanges in the region, which have little to no know-your-customer information standards, is a key factor in the region''s high rate of risky activity. According to the authors, such exchanges constitute about 6 percent of transaction activity in the region, compared to 1.2 percent for the next-closest region.
sanctions in response to the Ukraine invasion have further restricted citizens from entering numerous overseas crypto services, which could lead them to riskier services. Last week, the EU expanded restrictions on Russian crypto transactions, interding all cryptocurrency-asset wallets, accounts, and custody services from the country.