New data suggests Russians don’t trade crypto like they used to

While some crypto analysts believe that Russia could evade the economic sanctions imposed on it through the use of crypto, new data from Chainalysis suggests otherwise.

Russia’s crypto transaction volume drops

According to the data, crypto transactions volume across exchanges based in Russia has plunged by 50% within the past week. The firm says that volumes across exchanges stood at a little over $70 million as last week, but the figure is now at around $34 million.

Speaking on the possible cause of this decline in trading volume across exchanges in Russia, Citigroup Inc analyst Alexander Saunders acknowledged that the volume from the country has been relatively small.

He continued that Russian purchases had little influence on the recent rally of Bitcoin; instead, he believes that the price rise was in anticipation of a Russian-influenced surge in demand, which did not happen.

“Russian volumes have been relatively small so far, suggesting that the price action is more due to investors positioning for an expected uptick in demand from Russia, rather than Russian demand itself.”

Can Russia still use crypto to evade sanctions?

All of this means that the highly anticipated diversion to crypto among Russians did not happen as envisioned. This is congruent with one of our reports where we stated that Russia was more likely “to use China’s CIPS than a public network they can’t control.”

It should be noted that the probability of Russia using crypto to relieve the sanctions is now very much slimmer as authorities in the United States and Europe have set up different enforcement bodies to ensure that the country is unable to evade the restrictions.

Per Ari Redbord, the head of legal and government affairs at crypto crime investigator TRM Labs, crypto cannot provide enough liquidity for the country to evade whatever sanctions are imposed on it. In his words, “Russia cannot use crypto to replace the hundreds of billions of dollars that could be potentially blocked or frozen.”

Ukraine continues to rely on crypto donations

Russians might be having a hard time using crypto to evade sanctions, but that has not stopped Ukrainians from using crypto to fund their defense against the invasion of their territory.

The Volodymyr Zelenskyy-led Ukraine government and NGOs in the country have raised over $50 million through different crypto donations geared towards providing support for the military.

Aside from that, the UkraineDAO also raised roughly $6 million by auctioning an NFT of the country’s flag.

CryptoSlate also reported that Ukraine’s government had cancelled its airdrop plans, and instead, it would be issuing NFTs to support its military.