Crypto’s value proposition on display in Ukraine, the key driver of growth in Europe
Ukraine has catapulted itself as one of the main drivers of crypto assets in Europe as Ukrainian refugees, who fled from the unwanted presence of the Russian military since February, have used crypto to survive.
Value propositions of crypto assets were on full display in Ukraine when the country received about $100 million in crypto donations to fight the war against Russia. Its decentralized nature and imperviousness to the actions of national governments make crypto highly effective for use as donations in a fast, efficient, and permissionless manner.
With around 6 million people owning crypto wallets, Ukraine ranks 3rd in the world based on the ratio of wallet owners to its total population, and 13th in terms of the actual number of people who own them compared to other nationalities, according to data from TripleA.
Merchant Machine placed Ukraine among the top 3 countries for crypto use worldwide, alongside the United States and the United Kingdom, based on the number of crypto owners, and businesses that accept crypto, among other factors.
In February, the Ukrainian government sought crypto asset donations for military equipment and medicine. The country has so far received more than $100 million in crypto donations to support the Ukrainian resistance.
Chainalysis data show that Ukraine saw a steady increase in crypto transfers from the onset of the war through June 2022, while transfers in Russia and other countries have fluctuated.
Why the Ukrainian refugees
We spoke to Julia Bulakh, WOO Network Marketing Associate, to expound on how Ukrainians drive up the usage of crypto in Europe through the refugees. Bulakh is Ukrainian and based in Warsaw, Poland.
Based on United Nations data, Poland received the highest number of Ukrainian refugees (about 1.4 million), followed by Germany (1 million), and the Czech Republic (500k).
Chainalysis data show that Poland saw an increase in transfers by country in February and peaked in March.
“What’s interesting from our study is that we saw an increase in the number of searches for crypto-related terms in the Polish version of Google, but those search terms and characters are specific to Ukrainians, as well as the use of Cyrillic letters for searching. This indicates that the driver crypto-activities here are probably Ukrainians,” said Bulakh.
Germany on the other hand saw an increase in transactions within the first quarter of 2022 before a slump in figures in the second quarter, according to Chainalysis. “The increase [in transactions] could also be related to the Ukrainians who flee to Germany,” Bulakh noted.
Expect more users, as Ukraine plans incentives for crypto development
Toward the end of 2022, the Advisory Council on the Regulation of Virtual Assets met with international consultants, including Ernst & Young and the USAID Financial Sector Reform to adjust the tax code for the crypto market.
The National Securities and Stock Market Commission also said that part of the discussions is on implementing the European Markets in Crypto-Assets (MiCA) regulation in the Ukrainian digital assets market.
Yaroslav Zheleznyak, a member of the Ukrainian Parliament (Rada), said the goal is “to make crypto circulation in Ukraine legal and safe, but according to the principle of ‘do no harm,’ so that the market receives not (sic) regulation, but incentives for development and competitive advantages.”
Bulakh said that these developments would attract more Ukrainians to use crypto assets.
“A long-existing problem of distrust in crypto assets was solved in Ukraine. We witnessed individuals and businesses use crypto as soon as bank-transfer rules were tightened because of part of the military law. Crypto donations drove adoptions and showed that Bitcoin is not an element of the dark web but a transparent, safe, and reliable means of value transfer. The current government initiatives in regulations and educational programs would only scale the crypto adoption not just in Ukraine but also in Europe,” she further noted.
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