If you ask the Ukrainian central bank, crypto is a knife that can cut both ways. On the one hand, it poses a threat to macroeconomic stability, but on the other hand, it also offers promising opportunities for improved payment systems.
Temporarily skeptical point of view prevails
Ukraine’s central bank sees both good and bad in digital assets, but is taking a more skeptical stance on crypto at the bottom due to the financial and economic problems caused by the invasion, the NBU news agency said.
In April 2022, the NBU banned citizens from purchasing cryptocurrencies such as Bitcoin with the national currency, the hryvnia (UAH), and allowed such purchases only through foreign currency accounts. The central bank has also set a monthly limit on buying more than 100,000 UAH ($3,300) worth of crypto per month for Ukrainians. These restrictions also apply to cross-border peer-to-peer transactions.
The administrative restrictions regarding cryptocurrency transactions in Ukraine are temporary but necessary, an NBU press officer told March 9 Cointelegraph. The restrictions will be “gradually eased as the functioning of Ukraine’s economy and financial market normalizes,” the NBU said.
Threat to monetary sovereignty
The National Bank of Ukraine warns of the danger of “substitution of the national currency and the emergence of parallel flows of money” beyond their control, especially during the war, which could threaten the country’s monetary sovereignty. The NBU spokesman adds the following:
“In order to minimize such risks, especially during the full-scale war, the National Bank will take a strong stance on preventing restrictions on the use of the hryvnia as the sole legal tender in Ukraine.”
While the Ukrainian central bank remains cautious on crypto during the war, it is still optimistic about the technological innovations associated with digital assets, including better access to financial services, competition in payment services, attracting investment, crypto donations and other benefits.
For now, in particular due to the special circumstances, it chooses to limit the use of Bitcoin and other crypto such as Ethereum as much as possible in Ukraine. In this way, the central bank ensures that it maintains a little more control over the financial system at a time when that control can be crucial.