Analysis: Ukraine/Russia crypto narrative overblown

Analysis: Ukrainian crypto trading volume spiked as the Russian tanks rolled in – but still didn’t approach levels set during the hottest times in the market last year and is already subsiding.

Trading volume on Binance between Ukraine’s national currency, the hryvna, and the leading stablecoin, Tether, hit levels last seen in October, Tradingview data analysed by Stockhead shows.

On the Ukrainian crypto exchange Kuna, trading volume hit a three-month peak of $3.5 million on February 25.

The numbers seem to indicate there’s while there’s some truth to the idea that Ukranians worried about their banking system are fleeing to crypto, it’s certainly not a widespread movement as of yet.

Crypto to evade sanctions?

There’s also been some media reports speculating that Russia might use crypto to evade US sanctions meant to punish the rogue state.

But the US officials in charge of enforcing sanctions say they’re not worried about it.

“The scale of what they have to move, and where they have to move things from, [crypto’s] not necessarily going to be that concerning,” Todd Conklin, counselor to the deputy Treasury secretary, told Politico. An attempt to move that much money through exchanges would contribute to “a bit more of a spike in the crypto market, in my view, than has been observed lately”.

Crypto experts agree there’s little chance of this happening, as crypto markets are both too illiquid to be useful for an entire economy the size of Russia’s, and too transparent to be used for evasion.

5/ Could crypto be used to evade sanctions? Of course. Could it be used at a scale that would undermine the measures being taken? I don’t see how. Will legitimate crypto intermediaries comply with sanctions obligations? Better than a lot of banks, if recent history is any guide.

— Jerry Brito (@jerrybrito) February 28, 2022

17/ SECOND: crypto markets are too small, costly, & transparent to be useful for the Russian economy.

Crypto markets are thin to start with, & ruble trading pairs are rare. With Russia cut off from the world’s crypto industry, they can’t source nearly enough liquidity to matter.

— Jake Chervinsky (@jchervinsky) March 1, 2022