Current situation
After the war broke out between Russia and Ukraine since February 2022, there has been a sharp increase in the demand of stablecoins in Russia in an effort to protect valuable assets here, according to the latest report by Chainalysis on October 12.
Since the war broke out between the two countries, inflation has also severely affected the economies of both countries, and the cryptocurrency market has no exception. Ukraine has seen a 90% increase in fuel costs and 35% increase in food costs.
Russia has been subject to sanctions from the United States and several other countries against Russian oligarchs, raising the question of whether the Russians are looking for a method of hedging in cryptocurrency to avoid sanctions or not. But as Chainalysis reports, the cryptocurrency market does not have enough liquidity to support such large-scale sanctions. From there, the report from Chainalysis focuses on on-chain data to analyze how Russia's people are transitioning to cryptocurrencies rather than focusing on tycoons or those affected by sanctions.
Russia's removal from the cross-border banking network SWIFT and the National Bank of Russia recently agreed to legalize the use of cryptocurrencies for cross-border payments and international trade, leading to the using cryptocurrencies to make cross-border transactions become more feasible and stablecoins are the preferred medium of exchange due to their price-stable nature.
The share of stablecoins trading volume accounts for 42% of trading volume on major Russian services. It then increased to 55% in February and 67% in March after the war broke out and has continued to increase since then.
Conclusion
From the data from the above report, it can be concluded that the increase in the demand of stablecoins can be attributed to the fact that Russians trade and convert from ruble in exchange for stablecoins to protect their valuable assets in the context of high inflation since the war broke out and showing escalated signs. Russians still choose the cryptocurrency market as a vault for inflation in their country because of its borderless feature in particular as well as the stability of stablecoins in particular.
