Ukraine imposes restrictions on crypto purchases

• The National Bank of Ukraine has partially banned crypto purchases amid martial law, saying they are “unproductive capital outflows.”
• Henceforth, Ukrainians can only purchase crypto assets worth $3,300 monthly.

Ukraine is taking a new law into effect as a measure to prevent capital outflows from the nation. Following martial law, the National Bank of Ukraine (NBU) has now set limits on the number of cryptocurrencies citizens can purchase.

Of note, the new rule is among other restrictions on cross-border activities that the central bank’s board developed on Wednesday, and announced on Thursday. Ukrainians are henceforth prohibited from purchasing crypto assets using the country’s national currency, the hryvnia (UAH). Those wishing to purchase cryptocurrencies can only do so with foreign currencies, and even then, they are restricted to monthly purchases not exceeding 100,000 UAH ($3,300). The limit also applies to international peer-to-peer transactions.

Ukraine central bank restricts crypto purchases

Crypto purchases, according to the announcement, have now been deemed “quasi cash transactions.” This places them in the same category as electronic wallet deposits, foreign exchange transactions, and travel payments. Restrictions on all these forms of transactions prevent the “unproductive outflow of capital” from the country, the NBU has said.

The relevant changes will help improve the foreign exchange market, which is a necessary prerequisite for easing restrictions in the future, as well as reducing pressure on Ukraine’s international reserves,

Even as it enforces these restrictions, the central bank admits that international transactions have become increasingly necessary amid martial law. The reason is, that millions of citizens are being forced to seek refuge in other countries. However, the bank says it cannot afford these “unproductive cash flows,” adding:

Quasi cash transactions […] are mainly carried out to circumvent the current restrictions of the National Bank, in particular for investing abroad, which is prohibited under martial law. Therefore, the relevant transactions should be interpreted as leading to unproductive capital outflows.

A twist in the tale

The government of Ukraine has now adopted the new regulations, a statement from the NBU says. Other institutions had already begun adopting similar restrictions before the central bank’s announcement. PrivatBank, the largest commercial bank in Ukraine, reportedly prohibited its clients from purchasing Bitcoin using UAH in mid-March.

Previously, the Ukrainian government was actively working to legalize cryptocurrencies amid martial law. In March, the country’s president, Volodymyr Zelenskyy signed a law allowing the establishment of a framework for regulating crypto assets. The announcement by the central bank is therefore a sudden turn in expectations.

Still, the nation continues to receive donations in cryptocurrencies and from crypto firms such as Binance. Another aid in the fight against Russia is a planned exposure. Ukraine intends to expose the crypto wallets of top politicians in Russia to show how they are evading sanctions using cryptocurrencies.