The National Bank of Ukraine (NBU) has expressed a mixed stance on cryptocurrencies like Bitcoin after a year of war in the country. The central bank sees both good and bad in virtual assets, taking a more skeptical approach to crypto due to financial and economic issues caused by the war. According to the NBU press office, the regulator sees crypto as a threat to macro-financial stability but also acknowledges its potential to improve payment systems.
In April 2022, the NBU imposed restrictions on citizens’ ability to buy cryptocurrencies using the national currency, the hryvnia (UAH). The central bank set a monthly limit on such purchases, prohibiting Ukrainians from buying more crypto than worth UAH 100,000 ($3,300) per month, only allowing such purchases via foreign currency accounts. The restrictions also apply to cross-border peer-to-peer transactions. The administrative restrictions involving operations with cryptocurrencies in Ukraine are temporary, and the limits will be gradually weakened as the economy and financial market of Ukraine normalizes.
The NBU explained that the specified restrictions were necessary to stabilize the situation in the foreign exchange market and preserve macro-financial stability. The regulator sees risks of substitution of the national currency and the emergence of parallel money circulation, posing a threat to the monetary sovereignty of the state.
“To minimize such risks, especially during the full-scale war, the National Bank will take a strong position on preventing the narrowing of the scope of application of the hryvnia as the only legal means of payment in Ukraine,” the NBU spokesperson noted.
Despite taking a cautious approach to crypto during the war, the central bank remains bullish on technological innovations related to virtual assets. According to the NBU, there are many promises associated with crypto, including better access to financial services, competition in the field of payment services, the attraction of investments, and crypto donations.
Recently, Ukraine received a total of $70 million in crypto donations for the war, a significant amount that could be used for the country’s reconstruction. However, the NBU’s skepticism towards crypto could be a hurdle to effectively utilizing these donations. The NBU has not commented on how the crypto donations will be utilized, but it is likely that the regulator will take a cautious approach, given its stance on crypto.
Ukraine’s central bank is supportive of creating “civilized conditions for the development of the virtual assets market in Ukraine.” The NBU’s efforts to build a transparent and understandable regulation system will contribute to the development of a fair and efficient circulation of virtual assets.