Ukraine Ranked First in the World in the Use of Cryptocurrencies

Kataryna Habeliia September 2, 2020

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Ministry of Digits: Ukraine took first place in the world in the use of cryptocurrencies

Ukrainian citizens are the most active cryptocurrency users in the world. This is reported by the local Ministry of Digital Transformation regarding a study by the analytical company Chainalysis. However, experts from the cryptocurrency community explained that the official analyst report has not yet been released.

According to the ministry, the cryptocurrency usage index was calculated based on the value of transferred digital assets per capita, coin balances on online accounts, the volume of retail and p2p transactions worth less than $ 10,000, calculated at purchasing power parity.

According to the release, a large-scale community of blockchain developers is based in Ukraine. The volumes of non-cash payments are included in the top 5 of the world ranking.

«Due to the lack of a stock market, limited access to the world capital market and international transfers, as well as a high threshold for entering the real estate market, virtual assets are gaining popularity among the population of Ukraine,” — the Ministry of Digital Science writes, adding that representatives of small businesses in the country are actively using cryptocurrency for settlements on international marketplaces.

Now the cryptocurrency market in Ukraine is still in a gray zone. This, according to officials, creates potential risks for the state, business, and users.

The draft law “On Virtual Assets” was registered in the Verkhovna Rada in June 2020 and is being prepared for parliamentary consideration in September.

Deputy Minister of Digital Transformation Alexander Bornyakov noted that after the adoption of the profiling bill “On Virtual Assets”, the ministry intends to propose changes to the Tax Code and introduce procedures for financial monitoring of the market.

As the head of the expert group on virtual assets under the Ministry of Digital Industry Maxim Demyan explained, the index calculated in the study shows the activity of individuals owning cryptocurrency, not tied to Ukrainian business projects.

Where does the traffic of cryptocurrencies come from in Ukraine?

Mikhail Chobanyan, the founder of the Kuna exchange, points out that the figures presented in the release reflect Ukrainian realities:

“Over the past five years, a really huge cryptocurrency community has formed in Ukraine. According to my calculations, there are at least a million citizens who owned or own a cryptocurrency, understand what it is and how to use it. This happened due to the speculative component of cryptocurrencies and the desire of Ukrainians to reinvest the accumulated funds.”

He explained that the devaluation of the national currency and bank failures undermined public confidence in traditional financial institutions. And also led to an abnormal boom in the real estate market.

The second component, according to Chobanyan, concerns small and medium imports.

“Ukraine has draconian restrictions on foreign economic activity and small businesses choose cryptocurrency for settlements with foreign suppliers because it is safer, cheaper and faster. It is quite easy to buy digital assets — international and local platforms successfully compete with banks in foreign economic activity.”

For a complete assessment, it is necessary to familiarize yourself in detail with the methodology used by Chainalysis analysts, Chobanyan added.

The experts interviewed noted that the text of the Chainalysis study has not yet been made publicly available, and the Ministry of Digital Science referred to the summary of the report.

The head of the group of advisers of the blockchain4Ukraine inter-factional parliamentary association, Konstantin Yarmolenko, said that for more detailed comments, it is necessary to wait for the official release to be published.

Recall that in January 2018, Canadian entrepreneur and blockchain expert Don Tapscott named Ukraine one of the world leaders in blockchain implementation.

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