Ukrainian citizens are the most active users of cryptocurrencies in the world. This, the local Ministry of Digital Transformation says, citing a study by the analytics firm Chainalysis. Experts from the cryptocurrency community told ForkLog that the analysts’ official report has not yet been published.
The ministry says the cryptocurrency usage index was calculated based on the value of sent digital assets per capita, balances of coins on online wallets, and the volume of retail and P2P transactions under $10,000, calculated on a purchasing-power-parity basis.
According to the release, Ukraine hosts a large community of blockchain developers, and the volume of cashless payments is among the top five globally.
“Due to the lack of a stock market, limited access to global capital markets and international transfers, and a high entry barrier to the real estate market, virtual assets are gaining popularity among the Ukrainian population,” writes the Ministry of Digital Transformation, adding that representatives of small businesses in the country actively use cryptocurrency for transactions on international marketplaces.
The cryptocurrency market in Ukraine remains in a gray area, which, according to officials, poses potential risks for the state, business and users.
The bill “On Virtual Assets” was registered in the Verkhovna Rada in June 2020 and is due to be considered by Parliament in September.
Read ForkLog’s special feature for more on what will change for cryptocurrency holders after the law is passed.
Deputy Minister of Digital Transformation Alexander Bornyakov told ForkLog that after the passage of the profile bill “On Virtual Assets,” the ministry intends to propose changes to the Tax Code and to introduce procedures for financial-market monitoring.
As Maksim Demian, head of the expert group on virtual assets at the Ministry of Digital Transformation, explained to ForkLog, the index calculated in the study measures the activity of individuals who own cryptocurrencies not tied to Ukrainian business projects.
Founder of Kuna exchange, Mikhail Chobanian, notes that the figures presented in the release reflect Ukrainian realities:
“Over the past five years, Ukraine has formed a truly large cryptocurrency community. In my calculations, there are at least one million citizens who have owned or currently own cryptocurrency, understand what it is and how to use it. This happened thanks to the speculative component of cryptocurrencies and Ukrainians’ desire to reinvest accumulated funds.”
He explained that the depreciation of the national currency and the “bank runs” undermined public trust in traditional financial institutions, and also led to an anomalous boom in the real estate market.
The second factor, according to Chobanian, concerns small and medium imports.
“In Ukraine there are draconian restrictions on foreign economic activity (FEA), and small businesses are turning to cryptocurrency for settlements with overseas suppliers because this is safer, cheaper and faster. Buying digital assets is fairly easy — international and local platforms compete with banks in FEA.”
For a full assessment, one needs to examine in detail the methodology used by Chainalysis analysts, added Chobanian.
Experts interviewed by ForkLog noted that the Chainalysis study text has not yet been published publicly, and the Ministry of Digital Transformation cited a summary of the report.
The head of the advisory group of the cross-factional parliamentary association Blockchain4Ukraine, Konstantin Yarmolenko, said that more detailed comments would require waiting for the official release.
In January 2018, Canadian entrepreneur and blockchain expert Don Tapscott named Ukraine one of the world leaders in blockchain adoption.
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