Demand for cryptocurrency in Ukraine has skyrocketed since the country’s financial blockade was imposed by Russia. The government has now officially recognized crypto as a legitimate form of payment, and is encouraging citizens to acquire it.
The demand has been so great that the country’s national bank has had trouble keeping up with the demand for cash. In response, the bank has now opened an account where citizens can buy large amounts of crypto at once.
The crisis in Ukraine has sent demand for cryptocurrencies soaring in the country, with the average household now investing more in the asset than Ukrainians invested in U.S. stocks in the dot.com boom. The rising demand for cryptocurrencies in Ukraine has been fuelled by the continued war in the east, where Russia has deployed troops and military equipment, and has threatened to launch a full-scale invasion.
The Russian threat has caused bitcoin to surge by as much as 12% in Eastern European trading markets over the past two days. The cryptocurrency is up by as much as 50% year to date, relative to the S&P 500 index.
The market for digital currencies in Ukraine is gaining steam, as demand from users soars in the face of tightening Russian sanctions. That’s the word from Oleg Fishenko, the chief executive of E-Coin, a cryptocurrency exchange, who spoke in an interview with The Moscow Times on Tuesday.
The exchange, which is headquartered in Kiev and has offices in Russia, has seen a surge in interest from Ukrainian customers in recent weeks, Fishenko said. He added that the exchange currently has about 100,000 users, a figure that amounts to a significant jump from the 20,000 users it had at the end of January.
Ukraine has become a major crypto hotspot, as demand for digital currencies soars and Russian sanctions tighten, a Reuters special report has found. Two years ago, you wouldn’t have been able to buy a bitcoin in Ukraine. Today, you can’t find a single crypto exchange that isn’t operating at capacity.
Ukraine’s demand for cryptocurrencies has soared in response to a series of economic sanctions imposed by Russia, a sign of just how far the country’s financial system has been pushed into the Kremlin’s orbit. The sanctions, which have cut off Ukrainian companies from vital Russian financing, have also forced them to turn to cryptocurrencies, which are independent of traditional banking systems and can be used to avoid government controls.
Ukrainian banks and businesses have been turning to digital money in an effort to keep their operations going in the face of Russian restrictions, which have intensified in the past month. The economy is being forced to adapt, underscoring how global sanctions can sometimes have the unintended consequence of creating demand for the very instruments they are designed to block.