Chainalysis’s latest report reveals Eastern Europe as the fourth largest cryptocurrency market globally.

As per the report, the region received $499.14 billion in on-chain value between July 2023 and June 2024.

Eastern Europe also accounted for 11% of total global crypto transactions. Interestingly, centralized exchanges (CEXs) dominated the market at nearly $324 billion. At the same time, DeFi activity grew to $165.46 billion.

Ukraine and Russia came out as regional leaders

Ukraine and Russia maintained strong positions in the global crypto adoption index, ranking 6th and 7th, respectively.

Russia advanced six places from the previous year and is leading Eastern Europe with $182.44 billion in crypto inflows.

Ukraine followed with $106.1 billion in transactions. WhiteBIT, a crypto exchange with Ukrainian roots now headquartered in Lithuania, provided insights to Chainalysis.

Despite the war, WhiteBIT maintains a strong regional presence alongside other CEXes. However, some have relocated operations to other Eastern European countries due to security concerns.

The organization noted that “institutional and professional crypto transfers in Ukraine have surged as many seek financial stability amid the ongoing war, with cryptocurrencies viewed as a safer alternative.”

Bitcoin purchases using Ukrainian hryvnia totaled $882.6 million

Order book data analysis revealed major growth in Bitcoin (BTC) purchases using the Ukrainian hryvnia (UAH), totaling $882.64 billion.

This surge followed the UAH inflation peak of 26.6% in December 2022, with a subsequent decline in Q1 2023.

Consumer purchasing behavior typically lagging behind economic trends suggests Ukrainians pursued BTC as an alternative store of value.

Eastern Europe’s DeFi sector showed great development, placing third globally in year-over-year growth behind Latin America and Sub-Saharan Africa.

DeFi activity accounted for over 33% of total crypto received in the region. Decentralized exchanges (DEXs) dominated the sector, receiving $148.68 billion in crypto.

As per the report, Ukraine and Russia experienced growth of 160.23% and 173.88%, respectively. Ukrainian DEXs processed $34.9 billion, while Russian DEXs handled $58.4 billion.

Moldova, Hungary, and Czechia saw notable growth in DeFi lending services, which received $11.29 billion in crypto.

Countries like Hungary and Moldova experienced explosive growth in bridges and lending. As per the data, their total volume remained relatively small compared to regional leaders.

For instance, Hungary’s nearly 600% increase in bridge transactions amounted to $151 million, compared to Ukraine’s $897 million.

Transaction size analysis revealed changing trends. Ukraine experienced a 361.49% increase in large institutional transactions (over $10M), while also seeing substantial growth in retail transactions.

Large retail transactions ($1K-$10K) increased by 82.29%, and small retail transactions (under $1K) grew by 91.99%. Similar institutional growth patterns were observed in Russia, Belarus, Poland, and Slovakia.

Eastern Europe and MiCA rules

The EU’s Markets in Crypto-Assets Regulation (MiCA) implementation began in summer 2024. Also, the stablecoin regime is starting June 30, 2024.

Full application to all crypto-asset service providers is scheduled for December 30, 2024. Ukraine is also actively working towards adopting these standards.

“Embracing blockchain technology and integrating crypto-assets into a regulatory framework could be a major step forward for Ukraine’s efforts to support its economy, particularly during the ongoing war with Russia,” said Oleksandr Bornyakov, Deputy Minister of Digital Transformation of Ukraine.

He noted that a regulated crypto economy could generate tax revenue, attract talent, and position Ukraine competitively in the global digital economy.

Russia’s approach differs, with the government passing legislation in September to legalize crypto mining and international payments. This was following a years-long ban.

This move aims to reduce U.S. dollar dependence amid Western sanctions imposed after its invasion of Ukraine.