A recent study by blockchain analytics firm Chainalysis shows that crypto adoption is accelerating in Eastern Europe, with Ukraine and Russia at the forefront. The surge is fueled by emerging DeFi applications and rising institutional backing.
The ongoing Russo-Ukrainian war has also driven a shift toward alternative financial systems, as currency instability and sanctions increase reliance on non-traditional finance.
Eastern Europe’s Crypto Trend
A new report by blockchain analytics firm Chainalysis reveals significant cryptocurrency growth in Eastern Europe, driven by DeFi activity and institutional adoption, even amid political turmoil. DeFi transactions accounted for over a third of all crypto activity in the region last year, positioning Eastern Europe as one of the fastest-growing DeFi markets globally.
Previously, Chainalysis observed rising centralized exchange transactions in Russia and Ukraine; however, decentralized exchanges are now gaining momentum as the preferred platform for regional users.
Read more: DeFi Community Building: A Step-by-Step Guide
To help explain this shift, Ivo Georgiev, CEO and co-founder of the Bulgaria-based Ambire Wallet, gave an exclusive interview with BeInCrypto. As he put it, the central appeal of these decentralized institutions is their availability. In the US or Western Europe, for example, banks are easily accessible, even offering tax benefits for certain wealth-building activities.
“In Eastern Europe, such services are not only rare, but they’re very hard to access, requiring vast amounts of paperwork and often connections. DeFi offers a permissionless, easy and accessible alternative to this, where you can leverage your liquid assets and take loans against them without paperwork or anyone’s permission,” Georgiev explained.
The other main pillar for crypto adoption in Eastern Europe comes through institutions. This includes private ones like banks or other business enterprises, seeking an inflation hedge in a tumultuous political climate. However, a major sector is also sanctionless cross-border payments, which the Russian government increasingly supports.
In other words, Ukraine and Russia are both leading crypto adoption in Eastern Europe, and the war between them is helping power the trend. The conflict is destabilizing both currency and financial institutions in Ukraine, promoting crypto as an inflation hedge and alternative DeFi options. On the other hand, new sanctions against Russia also make crypto more attractive.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
Overall, Chainalysis’ report was optimistic about future growth opportunities for crypto in the region. It concluded by describing some of Ukraine’s efforts to reach compliance with MiCA, the new EU crypto standard. The country hopes to attract new waves of foreign business and investment by adopting similar regulations, even if it’s not eligible to be part of MiCA directly.
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