Last year, cryptocurrency markets had significant growth and rising interest in the sector. Chainalysis has published a report on global crypto adoption for 2021. In this article, we will analyze their report of crypto adoption for Eastern Europe.

Chainalysis is a data platform for blockchain. In over 60 countries, they provide data, software, services, and research to:

  • government agencies
  • exchanges
  • financial institutions
  • insurance
  • cybersecurity firms

Their data is used to power investigation, compliance, and market intelligence software. That software has been used to solve some of the world’s most high-profile criminal cases. Also, it is used to increase consumer access to cryptocurrency in a secure way.

The goal of Chainalysis Crypto Adoption Index is to provide an objective indicator of which nations have the highest levels of cryptocurrency adoption. One approach would be to simply rank countries based on transaction volume. Professional and institutional markets move the most cryptocurrency. Then, only wealthy countries would benefit from this. Chainalysis, on the other hand, aims to highlight the countries with the highest cryptocurrency adoption by regular people. Also, they focus on use cases relating to transactions and individual savings rather than trading and speculation.

Let’s see what have Chainalysis report are for Eastern Europe.

Adoption of Cryptocurrency in Eastern Europe

Eastern Europe is the fifth-largest cryptocurrency economy by region. Between July 2020 and June 2021, Eastern European addresses received around $422 billion in cryptocurrency. This marks an almost 1000 percent gain over last year’s total of $41 billion in cryptocurrencies. During the analyzed time period, Eastern Europe accounted for 11.8 percent of total cryptocurrency transaction activity.

Source: Chainalysis – The 2021 Geography of Cryptocurrency Report

Eastern Europe is home to two of the top-ranked areas on Chainalysis Global Crypto Adoption Index: Ukraine and Russia. They came in fourth and 18th position, respectively. However, both countries dropped in the rankings compared to the previous year, when Ukraine was placed first and Russia was ranked second. What was the cause of the drop? In both situations, there has been a decrease in P2P platform transaction volume, which is one of the adoption index’s three component metrics.

One theory for the popularity of cryptocurrencies in Eastern Europe is widespread distrust of institutions. Particularly in Russia and Ukraine. Russia, for example, ranks dead bottom in the latest Edelman Trust Barometer. It evaluates countries based on public trust in:

  • government
  • business
  • non-governmental organizations
  • the media

Russian and Ukrainian citizens have always had a high level of distrust in banks. Many early cryptocurrency adopters were driven by similar thoughts.

Capital Flight and Tax Avoidance

Capital flight and tax avoidance may potentially play a role in the adoption of cryptocurrencies in Eastern Europe, notably in Russia and Ukraine. Although both governments make it impossible for residents to transfer huge sums of money abroad, capital flight remains a serious issue. Chainalysis addresses cryptocurrency’s use as a tool for capital flight in Eastern Europe.

International transactions represent a larger proportion of cryptocurrency transaction volume in Eastern Europe than in comparable-sized regions. Only 14 percent of all transactions in Eastern Europe are projected to be between two Eastern European addresses. While the world average across all areas is 22 percent, 26 percent for North America and Western Europe, and 27 percent for Eastern Asia. Some of the differences might be due to capital flight. When looking at specific nations, it appears that Russia and Ukraine transfer a significantly higher percentage of cryptocurrency to other countries than the average.

Source: Chainalysis – The 2021 Geography of Cryptocurrency Report

An estimated 86 percent of all cryptocurrency transferred from addresses in Russia flows to addresses in another country. Furthermore, 87 percent of cryptocurrency sent from addresses in Ukraine flows to addresses in another country. Turkey is the only country that transfers a larger percentage of its cryptocurrency abroad.

Source: Chainalysis – The 2021 Geography of Cryptocurrency Report

Eastern Europe’s Crypto Crime

Eastern European addresses have the second-highest rate of exposure to illicit addresses, after only Africa. It has a much larger global cryptocurrency economy than Africa and Latin America. Latin America is third in terms of overall exposure to illicit activity. Furthermore, Eastern Europe is the only region with a total transaction volume of $400 million or more where illicit activity makes for more than 0.5 percent of total cryptocurrency value sent and received. Eastern Europe has sent the second most cryptocurrency to illicit addresses of any location.

Source: Chainalysis – The 2021 Geography of Cryptocurrency Report

Eastern Europe, more than any other region, transfers the most cryptocurrency to darknet marketplaces. This is mostly due to activities in the Hydra Market. Hydra is the world’s largest darknet market, and it only serves Russian-speaking people in Eastern Europe. However, like in other regions, fraud accounts for the majority of funds transferred from Eastern Europe to illegal addresses. We may assume that the majority of this activity represents victims sending money to scammers.

Source: Chainalysis – The 2021 Geography of Cryptocurrency Report

Moreover, for more great info, join us on Telegram to receive free trading signals.

Above all, for more cryptocurrency news, check out the Altcoin Buzz YouTube channel.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.