In a move to prevent capital outflows, the National Bank of Ukraine has announced new restrictions on cross-border transactions. Part of this prohibits residents from buying Cryptocurrencies using the national currency, hryvnia.
The announcement made on Thursday allowed cryptocurrency purchases with a foreign currency and limited the total monthly purchase to UAH100,000, equivalent to $3,300.
The regulator considers crypto purchases, travel payments, foreign exchange transactions, and depositing in electronic wallets “quasi cash transactions.”
In the announcement, the regulator explained why such a measure is necessary. It stated that it understands that Ukrainian citizens forced to leave the country still use their Ukrainian bank-issued cards to purchase goods and services.
But some use this card for quasi cash transactions to circumvent the current restrictions against investing abroad. Thus, these transactions would be “interpreted as leading to an unproductive withdrawal of capital from the country.”
With these new restrictions, the bank intends to limit the possibility of such transactions. According to the NBU, the government adopted these restrictions from the NBU resolution.
Ukraine hopes this will help improve its foreign exchange
The bank also stated that the temporary restrictions could improve foreign exchange by easing pressure on Ukraine’s foreign reserves.
Since the invasion of Russia, the foreign exchange market in Ukraine has processed substantial volumes of foreign currency purchases. In March alone, it processed $1.7 billion worth of transfers.
Part of the announcement reads, “The relevant changes will help improve the country’s foreign exchange market, which it considers a precondition for easing restrictions in the future.”
The restriction will not apply to cross-border P2P transactions to support internally displaced persons from Ukraine. In this case, the bank has provided a separate limit of UAH100,000 per month to make cross-border transfers from bank accounts in the national currency.
With the war between Russia and Ukraine nearing its third month, many in both countries have relied on cryptocurrencies in the face of uncertainty. Ukraine has received over $60 million worth of crypto donations since the war started.
The country has also been working on legalizing crypto, with President Zelenskyy signing a bill to create a legal framework for crypto in March.