Is a crypto conflict at stake after the war between Russia and Ukraine?

Technologists and military analysts wonder how important the role of crypto will be in the war between Russia and Ukraine. After all, Russia controlled more than 10% of the average monthly hashrate share in August 2021, while Ukraine is one of the top countries in crypto adoption.

Meanwhile, Chainalysis had some insights to share.

A crypto conflict on the map?

The crypto analytics firm revealed that demand for the Russian ruble/Ukrainian hryvnia trading pair registered a sharp spike.

chain analysis noted

“Between 2/19 and 2/24, the daily tx volumes of ruble trading pairs have grown 8.6x to $124 million USD, while the hryvnia volumes have grown 8.2x to $42 million.”

The company theorized that while this could be due to: “illegal actors” converting their money into crypto, it can also be a way to hedge against the declining value of both Russia’s and Ukraine’s currencies.

What is interesting here is that Ukraine is also developing an electronic hryvnia based on the Stellar blockchain. However, the e-hryvnia is very different from a central bank-issued digital currency. In an interview with Coin-Crypto, Carolyn Yi, spokesperson for the Stellar Development Foundation said:

“It is important to specify that the hryvnia electronic pilot is not a CBDC. It will be privately issued e-money on blockchain technology, built under Ukraine’s current e-money law.”

While millions in crypto donations sent to Ukraine, it remains to be seen whether digital currencies will be an important part of Russia or Ukraine’s military strategy during the war.

Another complication is that the National Bank of Ukraine place an order to suspend the use of e-money and wallets. It is not yet certain whether this also applied to the e-hryvnia.

Time for the keyboard warriors

chain analysis further observed Russian individuals or organizations affected by sanctions are unlikely to be laundering crypto now, as they would likely have completed this before the sanctions came into effect. At the same time, this does not mean that risks have been neutralised.

After seeing threats allegedly coming from the pro-Russian ransomware group Conti, Chainalysis stated: it would follow the evolving situation.

Skin in the war

Crypto investors can probably expect high levels of volatility in the market as well as second-to-second changes as new headlines and updates roll in. Santiment data showed that in the top 10 trend algorithm, all keywords were linked to the ongoing war. These also include terms like China, NATO, Sanctions and Peace.

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