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Ukraine bans the purchase of cryptocurrencies temporarily

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Two months after the implementation of a law intended to facilitate access to cryptocurrencies, the Ukrainian national bank has just banned purchases of cryptos with the national monetary currency, the hryvnia.

Shortly before the start of the war, parliament had indeed granted legal status to Bitcoin and other digital assets. President Volodymyr Zelensky ratified this law on virtual assets a month later, despite the conflict.

Ban on buying cryptocurrencies with the national currency

 

This ban remains a priori temporary and aims to limit capital outflows from the country. Ukrainian nationals will, however, be able to continue to acquire cryptocurrencies in foreign currencies. However, purchases will be limited to $3,400 per month.

This ban is based on the martial law applied in the country since the beginning of the Russian intervention, which prohibits quasi-cash transactions. The law also limits foreign exchange transactions as well as deposits on e-wallets.

These measures can easily be explained by the amounts recorded by the National Bank of Ukraine. Indeed, approximately 1.7 billion dollars were transferred out of Ukrainian banks during the month of March, and already 900 million since the beginning of April.

With the help of this measure, the National Bank of Ukraine hopes to improve the foreign exchange market. This would make it possible to envisage an easing of restrictions with a reduction of the pressure on the international reserves of the country.

A point on the role of cryptocurrencies in this conflict

 

Thanks to the law ratified by Zelensky in February 2022 and a call for donations accompanied by the links of two e-wallets, cryptocurrencies have flowed into Ukraine. The Financial Times now estimates donations at more than $100 million

The government’s preference was indeed for donations of digital assets for their speed and the direct nature of their transactions, unlike the traditional banking system.

Ukraine has also received support from several major crypto players. The Bored Apre Yacht Club, for example, sent the country $1 million in Ethereum. Binance has also provided financial support for around $10 million

But with the ongoing conflict, Ukraine fears the exit of a large part of its capital. In order to avoid the situation suffered by the Russian rouble, the country thus hopes to maintain the hryvnia at a reasonable rate.

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