Ukraine Government Limited Crypto Purchases Using Local Currency

Ukraine’s Central Bank, the National Bank of Ukraine (NBU), proclaimed last Friday that it had restricted crypto purchases. The Ukraine government has limited the crypto purchases using the country’s local currency as part of efforts to prevent capital outflows amid martial law.

The president of Ukraine, Volodymyr Zelenskyy, declared martial law in Ukraine on February 24, when Russia launched its war on Ukraine.

Recently, last Friday, the Ukrainian Central Bank announced a series of restrictions on cross-border “quasi-cash transactions”. These transactions will involve cryptocurrency, and they are using its national fiat currency. As a result, the new limitation will restrict the local citizens from buying crypto coins with the national fiat currency, the hryvnia (UAH).

According to the NBU’s announcement, Ukrainians may now buy quasi-cash assets. These assets will involve digital assets, traveler’s checks, and forex accounts. The limit will be up to a limit of 100,000 UAH ($3,400) per month only with foreign currencies. 

Moreover, Ukraine’s Central Bank has considered crypto purchases as “quasi cash transactions”. They are considered crypto purchases with operations such as travel payments, electronic wallet deposits, and foreign exchange transactions. The Central Bank has adopted restrictions on such transactions. The ultimate purpose is to prevent the “unproductive outflow of capital” from the nation amid martial law.

As per the NBU, “The relevant changes will help improve the foreign exchange market. This is a prerequisite for easing future restrictions and reducing pressure on Ukraine’s international reserves.”

The Ukrainian Central Bank acknowledged that the demand for international transactions has significantly increased in the midst of martial law.

Related: Cryptoassets Use in Ukraine War under Scrutiny by Global Regulators: Reuters

Crypto’s Role in The War and Supporting Ukraine Government

Ever since the start of the war in late February, crypto assets have been helping to raise millions of dollars for Ukraine’s government as it fights off the Russian invasion.

From the beginning, the use of crypto was part of Ukraine’s strategy. The government officials are using Twitter accounts to share details of crypto wallets, where donations can be made.

Just four days after the invasion, Ukraine raised $10.2 million. And the success story continued. So far, the Ukrainian government has raised more than $100 million through crypto donations. Cryptocurrency has proven to be an effective and fast approach for the Ukrainians to get immediate funding for supplies.

Author: admin