The Global Crypto Currency Index ranked Ukraine in 4th place in the Global Crypto Currency Adoption Charts for 2021, ahead of some of the better known 'usual suspects' such as Venezuela and Nigeria.
It is mainly the use of P2P exchanges which pushes Ukraine up the rankings, and it in fact ranks first for this indicator, which is the most valid measurement of 'ordinary people' using crypto in their day to day lives, rather than Ukraine's position being down to institutional investments, which is what props up North America and most countries in Wester Europe.
$8 billion in crypto assets moved in and out of Ukraine in the last year, an enormous sum given that the country is the second poorest in Europe.
Unfortunately Ukraine also one of the highest amounts sent to scam websites - Ukrainians, it seems, get scammed a lot in comparison to other countries!
What are the main drivers of cryptocurrency adoption in the Ukraine?
There are several conflating factors that make Ukraine a crypto hot-spot.....
There are high levels of mistrust in government and banks in particular -
Political corruption is endemic in Ukraine. According to one interviewee in this New York Times article Ukraine has an ‘anything goes ethos’ – you can literally get away with murder for cheap if you are well connected and know the right officials to bribe – and if you’re not well connected, it’ll just cost you more.
Banks are also dysfunctional because it takes an enormous amount of paperwork to send money abroad, with crypto this is much easier.
Crypto-Friendly Policies - including a 5% tax rate on crypto
Attracting tech companies, including crypto companies, is a major part of Ukraine's attempts to build its GDP - it is hoping that 10% of GDP will be contributed by tech companies within the next ten years.
To this end, it has recently introduced a 5% tax on crypto gains, one of the lowest in the world where crypto is recognised.
High numbers of tech experts
There are a proportionally high number of computer programmers in Ukraine - presumably this number will grow because of the country's efforts to attract crypto tech companies.
Inflation
Like in many other countries at the top of the crypto-adoption index, high levels of inflation have nibbled away at the value of the native currency, making crypto investments more appealing.
Tax avoidance
Ukraine has one to the highest amounts of crypto sent abroad,
Final Thoughts...
There is an interesting conflation of factors which explain the high level of crypto adoption in Ukraine - bizarrely BOTH the fact that the country is a bit of a mess in terms of its politics and inflation rate, but then more positively because the government has actively constructed policies to attract those with crypto - namely, low taxation.
I'm not sure if it's for me - it all sounds a bit wild west TBH!