The government of Ukraine has decided to implement new restrictions on withdrawals and exchange of its fiat currency, the hryvnia (UAH). Could this encourage the adoption of cryptocurrencies in the country?
Ukraine’s government applies restrictions to the hryvnia
Announced late last week, the measures are designed to stop the bleeding and keep the hryvnia’s value up. The country’s central bank has devalued the UAH by 25% against the dollar, and withdrawals are now even more limited.
Ukrainians will only be able to withdraw 12,500 UAH (334 euros) per week, compared to 50,000 previously (1,336 euros). In commercial banks, cash purchases will only be accessible if the amount is deposited for at least three months. Finally, bank cards issued by Ukrainian institutions are now subject to limits for international transfers.
The government said that these measures were temporary, and that they served to support the war effort. Ukraine wants to maintain its economy, which has suffered greatly from the conflict with Russia, at all costs. The hryvnia had already gradually lost value, before this devaluation:
UAH price growth since last year
Measures to promote the adoption of cryptocurrencies
As Ukraine’s fiat currency has lost its value, and people are increasingly restricted in their money movements, could this help the adoption of cryptocurrencies? Yes, according to some local players. Mikhail Chobanyan, founder of the Kuna exchange, told Ukrainian media outlet Forklog:
We expect the turnover and use of cryptocurrencies to increase. In Europe, 100,000 hryvnias is nothing at all. “
This assumption is supported by the example of other territories – for example Latin American countries – where people compensate for the loss of value of their local currency by using cryptocurrencies.
Mikhail Chobanyan also believes that these restrictions on the UAH will tend to slow down humanitarian aid, which will also have to adapt. As a reminder, the government of Ukraine had very early in the conflict launched an appeal for donations in cryptocurrencies, raising several tens of millions of dollars in a week.
