Ukraine’s Central Bank Sees Both Risks & Opportunities in Bitcoin
• The National Bank of Ukraine has expressed a mixed stance on cryptocurrencies such as Bitcoin due to macro-financial stability concerns caused by the invasion.
• The NBU imposed restrictions on citizens from buying crypto using the national currency and set a monthly limit of 100,000 UAH ($3,300).
• The central bank sees both promises and threats in cryptocurrencies, as it can be used to bypass currency regulation and lead to unproductive capital outflow from the country.
Mixed Stance From Central Bank
The National Bank of Ukraine (NBU) has expressed a mixed stance on cryptocurrencies such as Bitcoin after a year of war in the country. The central bank of Ukraine sees both good and bad in digital assets, taking a more skeptical approach due to financial and economic issues caused by the invasion.
Restrictions Implemented
In April 2022, the NBU prohibited citizens from buying cryptocurrencies like Bitcoin using the national currency, the hryvnia (UAH), only allowing such purchases via foreign currency accounts. The central bank also set a monthly limit on such purchases, prohibiting Ukrainians from buying more crypto than 100,000 UAH ($3,300) worth per month. The restrictions also apply to cross-border peer-to-peer transactions.
Risks To Macro Financial Stability
The administrative restrictions involving operations with cryptocurrencies in Ukraine are temporary according to an NBU press officer. Transactions with cryptocurrencies can be used to bypass currency regulation which poses threats to macro-financial stability according to the regulator. This could also lead to substitution of the national currency and emergence of parallel money circulation which could be beyond effective control during war time.
Promising Opportunity For Payments
At the same time, however, there is potential for better payments through cryptocurrency usage according to the NBU press office. They are looking towards building a system of transparent and understandable regulation that would contribute towards development of fair and efficient circulation of virtual assets within Ukraine.
Crypto Donations Since Start Of Conflict
Ukraine has netted $70 million worth in crypto donations since start of Russia conflict according to reports last year which further demonstrates potential for positive impact within Ukrainian economy despite overall mixed stance from central bank regarding cryptocurrency usage within country’s borders.
