The National Bank of Ukraine has decided to ban Ukrainian citizens from making cryptocurrency purchases via hryvnia, the Ukrainian monetary currency, to prevent the risk of capital outflows. The decision comes barely a month after the law was put in place to regulate and facilitate access to cryptocurrencies within the country.
Ukraine limits Bitcoin purchases
According to a statement from the National Bank of Ukraine (NBU) released on Thursday, April 21, it will now be impossible for Ukrainian citizens to buy cryptocurrencies in hryvnia, the local currency.
Under the martial law extended on March 26, the central bank wants to limit the risks of capital outflows from the country. According to the statement, Ukrainian citizens will still be able to buy cryptocurrencies in foreign currency without exceeding 100,000 hryvnia monthly, or about $3,400.
The ban on buying cryptocurrencies is expected to remain temporary, according to the statement:
“These relevant changes will help improve the foreign exchange market, which is a necessary precondition for easing restrictions in the future, as well as reducing pressure on Ukraine’s international reserves. “
So, according to the NBU, cryptocurrency purchases are treated as “quasi-monetary transactions” in the same way as foreign exchange transactions, e-wallet deposits and payments for travel.
“Cash equivalent transactions […] are mainly carried out to circumvent the current restrictions of the National Bank, in particular to invest abroad, which is prohibited by martial law. Therefore, the transactions concerned must be interpreted as involving unproductive capital outflows. “
With the Russian-Ukrainian conflict still ongoing, the NBU found that the equivalent of $1.7 billion was transferred out of the country’s banks in March alone, and as much as $900 million in the ongoing month of April.
Cryptocurrencies to Ukraine’s rescue
This announcement of restrictions on cryptocurrency purchases comes barely a month after Ukrainian President Zelesnsky signed a law supporting the adoption and regulation of cryptocurrencies.
The law on digital assets included a special legal status for digital assets, as well as the creation of a list of digital asset providers for registration with the National Bank of Ukraine and the National Securities and Exchange Commission.
Also, since Ukraine declared it was accepting cryptocurrency donations on 26 February, they have surged to over $100 million, according to a recent Financial Times investigation.
Many figures in the cryptocurrency world have supported Ukraine during the conflict. These include FTX and Everstake teaming up to create “Aid For Ukraine”, a site dedicated to digital asset donations, and the Bored Ape Yacht Club (BAYC) donating $1 million in early March.
Cryptocurrency donations are widely sought after, as they allow for very fast and unmediated transactions, unlike the traditional banking system which can sometimes be a hindrance.
