Eastern Europe received $630.9 billion in cryptocurrency on the blockchain between July 2021 and June 2022, making it the fifth-largest cryptocurrency market. Alongside, it’s also become a region with the most illicit crypto activity.

Chainalysis, a blockchain and cryptocurrency research and analysis firm, published a detailed report on the Eastern European crypto market.

According to the report, Eastern Europe has always been one of the largest markets for cryptocurrencies. Whereas, the war in Ukraine has pushed adoption even higher.

Most Illicit Crypto Activity Hotspot

According to the data in the report, Eastern Europe has played a surprising amount of stability in recent years, remaining around 10% of the world’s largest crypto ecosystem. According to the study, Eastern Europe is the fifth-largest regional cryptocurrency market.

This market accounts for 10% of all crypto transactions, and it received $630.9 billion in on-chain value between July 2021 and June 2022. Other areas, however, would have been more volatile.

According to the report, approximately 18% of crypto activity in Eastern Europe is “risky or illicit,” the highest percentage of any region examined by the company. However, it is primarily the result of high-risk transactions, with the bloc’s rate of illegal transactions falling below that of Sub-Saharan Africa and Latin America while matching that of North America.

Furthermore, the presence of “high-risk exchanges” with little to no know-your-customer (KYC) information standards contributes to the region’s high rate of risky activity. These high-risk exchanges account for approximately 6% of regional transaction activity, compared to 1.2% for the next-closest sector.

Russian-Ukrainian War Elevated “High-Risk” Crypto Activity in Eastern Europe

After the US began sanctioning Russian oligarchs and Putin allies, many people began looking for ways to cash out their crypto holdings, turning to exchanges in neighboring countries.

Russia, the largest country in Eastern Europe, is facing sanctions as a result of the invasion of Ukraine, which prevents its citizens from using multiple foreign crypto services and may steer them toward riskier ones.

Last week, the EU banned crypto payments, all cryptocurrency wallets, accounts, and custodial services. As a result, Russian cryptocurrency transactions are now subject to even tighter controls.

According to Chainalysis data, after the war, online traffic to Russian cryptocurrency businesses increased in countries such as the United Arab Emirates, Georgia, and Turkey. Following the invasion of Ukraine in March, the volume of cryptocurrency transactions in Russia increased in both crypto-to-crypto and crypto-to-fiat money transactions.

Furthermore, an unnamed expert who has worked with financial intelligence units in Eastern Europe claims that oligarchs and ordinary citizens were looking for ways to transfer money or cash out of Russia.

According to previous Chainalysis research, ransomware and crypto-based money laundering have historically been popular in Russia.

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