Top Peak AscendEX Insight: Can Ukraine Become the World's "Crypto Granary"?
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Top Peak AscendEX Insight: Can Ukraine Become the World's "Crypto Granary"?
Amid the ongoing surge in the cryptocurrency market triggered by the Russia-Ukraine conflict, BTC, which previously suffered sharp losses due to geopolitical tensions, has now rebounded strongly.
Navigating Web3 tides with focused insightsIn 2021, a Chainalysis research report indicated that Ukraine ranked fourth globally in cryptocurrency transaction volume and contribution, behind Vietnam, India, and Pakistan. The New York Times further reported that Ukraine's daily cryptocurrency trading volume far exceeded that of its fiat currency, the hryvnia.
Besides the Hryvnia, There’s Cryptocurrency
Recently, Ukraine has been deeply entangled in the Russia-Ukraine tensions, causing the hryvnia-to-dollar exchange rate to continuously decline, with daily losses at times exceeding 1.7%. Accompanying the depreciation of the hryvnia, hundreds of billions of dollars in capital have flowed out, dragging down markets such as stocks and insurance into severe business crises.
According to media reports, to prevent further deterioration, Ukraine's central bank has implemented cash withdrawal restrictions. However, beyond the hryvnia, Ukraine also has cryptocurrency. As one of the few countries globally offering comprehensive support for cryptocurrencies, Ukraine has created conditions for converting hryvnias into digital assets through legalization measures.
▲Data source: Coingecko – 0301
As the Russia-Ukraine conflict escalates, the trading market between the Ukrainian hryvnia (UAH) and cryptocurrencies like BTC and USDT has become extremely active. According to Coingecko data, on Kuna—a platform listing hryvnia trading pairs—UAH-denominated trades accounted for as high as 77.6% of total trading volume (24-hour). Specifically, USDT/UAH, BTC/UAH, and ETH/UAH represented 41.6%, 14.7%, and 14.6% respectively, collectively surpassing 70% of overall market activity.
▲Data source: Coingecko – 0301
Notably, on February 25, driven by strong demand for hryvnia trading, Kuna reached a peak trading volume of $4.8768 million. Amid the sustained heating up of the crypto market triggered by the geopolitical crisis, Bitcoin (BTC), which had previously suffered sharp declines due to the tension, staged a remarkable rebound.
AscendEX data shows that by 11:00 AM on March 1, BTC surged from $37,770.29 the previous day to $43,140.11, marking a 24-hour gain of 14.21%. Compared to its price low on February 24, BTC achieved an impressive increase of nearly 30%. At the time of writing, BTC had largely recovered to early February 2022 levels.
Digital Transformation: Building a Haven for the Crypto Industry
Long known as the "breadbasket of Europe" due to its status as the world’s third-largest grain exporter—thanks to hosting a quarter of the planet’s black soil—Ukraine is now making equally notable strides in the cryptocurrency space. Given this recent market performance, one might wonder: could Ukraine evolve into a global “crypto granary”?
Among many indicators, government-level initiatives are perhaps the most telling. In September 2019, the Ukrainian government approved the establishment of the Ministry of Digital Transformation. This new ministry evolved from the State Agency of Electronic Governance and is responsible for formulating and implementing national digital transformation policies, including digitization, open data, national electronic information resources, interoperability, rollout of e-services, and electronic trust services.
Following the creation of the Ministry of Digital Transformation, in December 2020, the Ukrainian government collaborated with the Stellar Development Foundation on initiatives aimed at fostering the development of a digital asset ecosystem. The goal was to make high-quality decisions supporting the growth of Ukraine’s crypto-asset ecosystem, including establishing a framework for a central bank digital currency (CBDC).
In a media interview, Deputy Minister Polyakov stated that in 2021, Ukraine’s cryptocurrency industry grew fourfold—outpacing all other sectors of the economy. He believes the crypto industry serves as a powerful engine driving the country’s digital economic development.
If it's expected that embracing cryptocurrency can accelerate economic growth in a nation, then Ukraine’s latest signal should be seen as major positive news—not just for its own economy, but for the global crypto industry, especially companies operating within the crypto sector.
According to Polyakov, Ukraine is currently building a legal framework to create a transparent and stable regulatory environment for blockchain and cryptocurrency companies. This aligns perfectly with the growing global demand among crypto firms and institutions for legitimate commercial environments. Currently, over 100 companies in Ukraine are already engaged in crypto-related operations.
Additionally, Ukraine has established an Economic Innovation Support Fund totaling $18 million to assist startups, including those in the blockchain sector. Moreover, Ukraine enjoys favorable policy conditions and broad public support.
Statistics show that Ukrainians are already among the world leaders in owning and using cryptocurrencies. Out of a population of approximately 43 million, around 5.6 million people hold cryptocurrency wallets with some balance—accounting for 13% of the population—and placing Ukraine among the top five nations globally in terms of crypto user numbers.
In the 2021 Chainalysis Global Crypto Adoption Index, Ukraine replaced China to rank fourth globally, while China dropped to thirteenth and the U.S. ranked eighth. Ukraine ranked fifth and sixth globally respectively in on-chain value received and retail-sized on-chain value received.
Furthermore, as part of efforts to promote digital literacy, the Ukrainian government launched the “Diia.Digital” education program in 2020. Through online programs released by the Ministry of Digital Transformation, the public receives systematic education about cryptocurrency and blockchain technology. Upon completing all video courses, participants receive official completion certificates.
With Legal Foundations, the Dream of a ‘Crypto Granary’ May Soon Be Realized
Clearly, Ukraine is attempting to leverage innovative forces such as digital economies and cryptocurrencies to achieve a strategic leap forward in national development. Eager to explore new frontiers, Ukraine is capitalizing on its advantages in power supply and skilled IT labor to foster the growth of its domestic cryptocurrency industry, generate employment and entrepreneurial opportunities, improve citizens’ incomes, and break free from historical constraints toward rapid development. Since 2014, Ukraine has steadily advanced efforts to regulate cryptocurrency activities.
In recent years, Ukraine has made tangible progress, becoming one of the first countries to incorporate concepts such as virtual assets, digital wallets, and private keys into national law. In December 2019, Ukraine’s parliament (Verkhovna Rada) amended existing legislation to introduce key legal terminology and definitions related to cryptocurrencies. Virtual assets were formally defined as property that can be traded, transferred, used for payment, or invested in. In September 2021, Ukraine’s parliament passed, by a vote of 276 to 6, a draft law legalizing cryptocurrencies and other virtual assets along with corresponding regulatory measures.
In February 2022, Ukraine’s parliament overwhelmingly approved the “Law on Virtual Assets of Ukraine” with 300 votes in favor and only 2 opposed. The law details requirements for exchanges providing crypto trading services, outlines penalties for violations, and designates primary regulatory authorities. With this move, Ukraine officially joined the ranks of countries where crypto assets are legally recognized—following Japan, Germany, Singapore, Luxembourg, and others.
The legal recognition of cryptocurrencies and exchanges in Ukraine not only means these digital assets will enjoy legal protection, but also lays a crucial foundation for developing related regulations, including taxation frameworks for crypto transactions. For global crypto professionals, despite current regional instability, Ukraine has successfully positioned itself as a viable destination for industry development and market expansion.
Amplified by Ukraine’s supportive crypto-compliant environment, cryptocurrencies have played a rare real-world role in this conflict—becoming a vital fundraising mechanism for international support. On February 26, Ukraine’s Vice Prime Minister and Minister of Digital Transformation, Fedorov, tweeted an appeal for cryptocurrency donations, providing specific BTC, ETH, and USDT wallet addresses.
Media reports indicate that, at the time of writing, Ukraine had received approximately $37 million worth of cryptocurrency donations. Additionally, crypto projects Polkadot and VeChain contributed an extra $13 million in aid. As awareness of these donation channels spreads further, this figure is likely to continue rising. Still, an end to hostilities remains far more desirable than increasing donation totals.
For most people, the Russia-Ukraine conflict has brought war closer than ever before, drawing attention to Ukraine’s proactive push for digital economy development, embrace of cryptocurrency, and its formal legalization. Once peace returns and reconstruction begins, the potential for innovation and growth in this nation will be immense. One day, becoming the world’s “crypto granary” may no longer seem far-fetched.
About AscendEX
AscendEX (asdcn.me), established in 2018, is a global compliant cryptocurrency trading platform built by a veteran Wall Street quantitative trading team with traditional financial expertise. It provides cryptocurrency-related services to users across more than 200 countries and regions worldwide.
Disclaimer: The above content is compiled from public sources and is provided solely for reference. It does not constitute any investment advice. Please remain rational and mindful of investment risks.
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