How Ukraine’s wide use of cryptocurrency is playing out during the war

Pre-War Scene

Before the war, Ukraine's cryptocurrency scene was thriving, driven by a tech-savvy population and a failing banking system. Michael Chobanian highlights that Ukraine consistently ranked among the top five countries for crypto users per capita, thanks to excellent internet infrastructure and a distrust in traditional banks 1. He explains, "We don't trust the banking system, we don't trust the government, we don't trust anyone," emphasizing the appeal of decentralized systems 1. The country's tech industry, with its high education levels and skilled developers, further fueled the crypto boom, making it a significant part of the economy 2.

   

Crypto Crisis

The onset of war in Ukraine has drastically altered the cryptocurrency landscape, reducing transaction volumes and shifting its primary use cases. Michael Chobanian notes that the gray market, which constituted a significant portion of Ukraine's GDP, relied heavily on crypto due to the inefficiencies of traditional banking 3. With the war, crypto's role has pivoted to humanitarian aid and savings, as traditional financial systems falter 4. "The only other solution to buy something outside of Ukraine is only using crypto," he states, underscoring its necessity in international transactions 4.

   

Trust Issues

Trust and stability remain significant challenges in Ukraine's cryptocurrency usage, especially amidst the ongoing war. Michael Chobanian expresses skepticism about stablecoins like USDT, questioning their financial backing and stability 5. He advocates for self-custody of crypto assets, warning against the risks of centralized exchanges 6. "Don't store your crypto with me because it's not your crypto, it's my crypto," he advises, promoting decentralized solutions as the safer alternative 7.