Cryptocurrency transactions are still occurring in Russia despite a sweeping wave of sanctions imposed in response to the invasion of Ukraine.
The research firm Kaiko recently tracked trading of bitcoin and the ruble and bitcoin and the hryvnia, Ukraine's currency.
'Crypto Industry Remains in a Tight Place'
The average bitcoin-ruble and bitcoin hryvnia trade size converted into U.S. dollars on Binance spiked following Russia’s invasion of Ukraine, Kaiko said in a report.
The average trade size could be an indicator of larger traders, so-called "whales", being active in the market, although many whales will split large orders into smaller chunks to minimize the price impact, Kaiko said.
The spike in trade size comes as ruble and hryivnia crypto trade volumes surged after Russia’s invasion, the report said, boosted by record local currency devaluation and market disruptions.
Overall, the average trade size for both pairs remained relatively small which suggests that mostly retail users are driving the current high volumes, Kaiko said.
"The crypto industry remains in a tight place as capital markets sanctions against Russia intensify," the report said. "The biggest centralized exchanges refused to commit to a blanket ban of all Russia-based users without a legal requirement to do so."
However, other major industry players took a more proactive stance with blockchain gaming company Animoca Brands, NFT marketplace OpenSea, crypto wallet Meta Mask and infrastructure provider Infura moving to restrict users from certain jurisdictions.
Fiat currencies serve as crucial “on-ramps” into cryptocurrency markets, Kaiko said, enabling traders to buy cryptocurrencies and eventually cash out.
Binance offers the most fiat pairs globally, including those denominated in the ruble and hryvnia.
Binance and other major cryptocurrency exchanges have resisted freezing Russian addresses.
Tether Volatility Soars
The exchange said last week that "to unilaterally decide to ban people's access to their crypto would fly in the face of the reason why crypto exists."
The reported noted that the ability to access fiat currency markets has taken on new relevancy amid the past week’s global financial volatility and currency devaluation.
Tether, the world’s largest stablecoin, saw its 20D volatility soar to its highest level in more than a year as markets climbed and then sold-off at one of their quickest rates ever, Kaiko said.
Stablecoins like tether have a strong appeal in times of market-wide volatility due to their 1:1 U.S. dollar peg, the report said, and have recently seen high volumes compared with the Russian and Ukrainian currencies, which have sunk to record lows.
The U.S. and the European Union have imposed sanctions on Russia in response to the Ukraine attack.
Selected Russian banks were disconnected from the SWIFT, a secure messaging system used by financial institutions, brokers, and investment firms.
Russia's economy has suffered under the sanctions with its stock market closing and the ruble's value plummeting.
President Joe Biden is expected to sign an executive order on cryptocurrency this week that will mark the first step toward regulating how digital currency is traded.
