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Ukraine’s central bank sees both promise and danger in bitcoin

BusinessCryptoUkraine's central bank sees both promise and danger in bitcoin
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The National Bank of Ukraine (NBU) has expressed a mixed stance on cryptocurrencies such as bitcoin (B T c) after a year of war in the country.

According to the NBU press office, Ukraine’s 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 invasion.

In April 2022, the NBU prohibited citizens from buying Cryptocurrencies such as bitcoin, using the national currency, the hryvnia (UAH), allow such purchases only through foreign currency accounts. The central bank has also set a monthly limit on such purchases, preventing Ukrainians from buying more than 100,000 UAH ($3,300) of crypto per month. Restrictions also apply to cross-border peer-to-peer transactions.

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An NBU press officer told Cointelegraph on March 9 that the administrative restrictions associated with operating cryptocurrencies in Ukraine are temporary. “The limits will be gradually loosened due to the normalization of the functioning of Ukraine’s economy and financial market,” the NBU said. ,

“The National Bank is participating in the creation of a system of transparent and understandable regulation, which will contribute to the development of fair and efficient circulation of virtual assets.”

According to the regulator, the specified sanctions were necessary for Ukraine to stabilize the situation in the foreign exchange market and maintain macro-financial stability.

“Transactions with cryptocurrencies can be used to bypass currency regulation, in particular – as a channel for unproductive capital outflows from the country, which is currently at risk for macro-financial stability,” said the NBU representative. poses a threat.”

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The Central Bank of Ukraine also sees the risks of “substitution of the national currency and the emergence of parallel money circulation”. According to the NBU, such risks are particularly high during times of war and are beyond the effective control of the regulator. “This may pose a threat to the monetary sovereignty of the state,” said the NBU spokesperson:

“To mitigate such risks, especially during a full-scale war, the National Bank will take a firm position to prevent narrowing the scope of application of the hryvnia as the only legal means of payment in Ukraine. “

Despite taking a cautious stance towards cryptocurrencies during the war, Ukraine’s central bank is still 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, investment attraction, crypto donations and other benefits.

Therefore, the Central Bank supports the need to create “decent conditions for the development of the virtual assets market in Ukraine”, said the NBU press office.

The NBU’s latest comments come shortly after Yuriy Boiko, commissioner of the National Commission on Securities and Stock Market of Ukraine. The war had no effect on the authority’s regulatory stance, According to the official, Ukraine continues to follow in the footsteps of the European Union with regard to digital asset laws.