Crypto Trading Volumes in Ruble Fall Despite ECB Warning Over Crypto Use in Russia

The sanctions imposed against Russia by the US and its Western have affected the Russian economy, and the Russian ruble has dipped. There have been speculations among global regulators that Russia could use cryptocurrencies to avoid these sanctions.

Members of the cryptocurrency community have argued that Russian oligarchs and institutions could not use Bitcoin to avoid these sanctions. Blockchain is an open ledger where transactions can be easily traced.

Crypto trading volumes in ruble fall

The president of the European Central bank, Christine Lagarde, has reiterated her warning on businesses that were helping Russian institutions and individuals avoid the sanctions levied against them. However, the current market data shows that crypto trades dominated by the Russian ruble have dropped significantly.

On March 18, cryptocurrency traders dominated by the Russian ruble had dipped by more than 50% to sit at around $7.4 million. This is a notable dip given that these volumes had peaked at $70 million on March 7.

Given the global crypto market volumes, $7.4 million is a tiny amount. The total trading volumes for Bitcoin currently range between $20 billion and $40 billion. This is contrary to a statement given by Lagarde at the Bank for International Settlements Innovation, saying that “volumes of rubles into stable, into cryptos, at the moment [is at] the highest level that we have seen since maybe 20201.”

“So is it [crypto] a threat? Yes. Has it been a threat in the past? Yes, because when you look at a lot of the dubious transactions that are taking place, a lot of the criminal activities payments that are taking place, very often you find some crypto assets,” Lagarde added.

Lagarde’s remarks that crypto was largely used for illegal activities goes against an earlier report by Chainalysis. Chainalysis, a blockchain analytics firm, noted that the amount of crypto used for illegal activities was significantly low compared to the amount of cash used for illicit activities.

Jake Chervinsky from the Blockchain Association noted that Russia was less likely to use cryptocurrencies to avoid Western sanctions.

1/ Russia can't & won't use crypto to evade sanctions.

Concerns about crypto's use for sanctions evasion are totally unfounded. They fundamentally misunderstand:

– how sanctions work
– how crypto markets work
– how Putin is actually trying to mitigate sanctions

I'll explain 🧵

— Jake Chervinsky (@jchervinsky) March 1, 2022

Another report from Kaiko noted that ruble to Tether trading volumes had dropped by 86% from $38 million to below $5 million this year. An influx of trading volumes was recorded in the days leading up to the war.

The current crypto trading volumes in Russia are at the same level as at the beginning of February, when there was less tension between Russia and Ukraine. These trading volumes were low even before sanctions were imposed on the country.

Cryptocurrency use in Ukraine

Ukraine has recorded an increase in cryptocurrency trading volumes. The Ukrainian government has received millions of dollars worth of cryptocurrency donations. The country used $15M from the donated cryptocurrency to buy military supplies. Charity organizations have also benefited from donations made in digital assets.

The Ukrainian hryvnia has also been affected by the ongoing war. This has resulted in high trading volumes in the country. Moreover, Ukrainians fleeing the country are having an easy time transacting in Bitcoin and other cryptocurrencies overseas. Transacting in hryvnia or accessing Ukrainian bank accounts in other European countries.

Before the onset of the war, the Ukrainian government had announced the creation of a regulatory framework for cryptocurrencies. The recent growth in crypto use in the country will foster further crypto usage, and this could be a major boost for the crypto market in Ukraine. The NFT market in Ukraine is also expected to grow, with the country planning an NFT drop.