Ukraine Bans use of Local Currency for Bitcoin Purchases
With martial law imposed in Ukraine, the country’s central bank is taking measures for ensuring there are no capital outflows. This has prompted the National Bank of Ukraine (UNB) to impose restrictions where crypto purchases are concerned. On Thursday, an official announcement introduced a new set of restrictions that are applicable to cross-border transactions. As per these restrictions, people will not be permitted to use the hryvnia (UAH) for making crypto purchases like that of Bitcoin (BTC). This means that Ukrainians can no longer use their national fiat currency for buying crypto and would have to rely on foreign currency for doing so.
In addition, a monthly limit on purchases has also been imposed, which is around 100,000 UAH, which is equal to $3,300. This limit is also applicable in the case of peer-to-peer transactions conducted internationally. The announcement stated that crypto purchases were being regarded by the NBU as ‘quasi cash transactions’, along with other operations, such as travel payments, foreign exchange transactions as well as deposits in electronic wallets. The central bank has decided to implement restrictions on these transactions in order to prevent unnecessary capital outflow from the country, with martial law having been imposed.
The NBU stated that the changes would come in handy for improving the forex exchange market, which could be useful when they ease of restrictions down the road. Plus, it would also alleviate some of the pressure on the international reserves of the country. As per the central bank, martial law has pushed up the demand for international transactions, as there are millions of Ukrainians who are being forced to leave the country. However, the announcement said that the central bank cannot afford excessive capital outflow, which includes crypto purchases. These transactions are usually conducted for making investments abroad, but they are not permitted under martial law.
The changes were adopted by the Ukrainian government as of Wednesday. Several sources dictate that some banks in Ukraine had already adopted such measures. Ukraine’s largest commercial bank, PrivatBankhad reportedly prohibited its clients from using the national fiat to buy Bitcoin in mid-March. But, these restrictions have certainly raised eyebrows because the country’s government has been aggressively working on crypto legalization. As a matter of fact, VolodymyrZelensky, the Ukrainian President, had signed a law in March aimed at developing a legal framework in which the crypto market in the country could operate.