Ukraine Bans Bitcoin Purchases With National Currency Amid Martial Law

Ukraine Bans Bitcoin Purchases With National Currency Amid Martial Law

The National Bank of Ukraine (NBU) continues to take steps to prevent capital outflows amid martial law, applying significant restrictions on the purchase of cryptocurrencies.

The Ukrainian central bank officially announced a series of restrictions on cross-border operations on Thursday, prohibiting natural persons from buying cryptocurrencies such as Bitcoin (BTC) with the national currency, the hryvnia (UAH).

Ukrainians are now allowed to buy Bitcoin and other cryptocurrencies only with foreign currency, with total monthly purchases capped at 100,000 UAH ($3,300). The corresponding limit also applies to international peer-to-peer transactions.

According to the announcement, the NBU has considered cryptocurrency purchases as “quasi-cash transactions” along with operations such as e-wallet deposits, foreign exchange transactions, and travel payments. By adopting restrictions on these transactions, the central bank aims to prevent “unproductive capital outflows” from the country amid martial law.

“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,” wrote the NBU.

The central bank admitted that the need for international transactions has increased massively amid martial law as millions of citizens have been forced to leave Ukraine. However, the NBU cannot afford “unproductive capital outflows,” which include investing in cryptocurrencies, the announcement notes, adding:

“Quasi-cash transactions […] they are done mainly to circumvent the current restrictions of the National Bank, in particular to invest abroad, which is prohibited by martial law. Therefore, the transactions in question must be interpreted as leading to unproductive capital outflows.”

According to the NBU, the Ukrainian government adopted the relevant changes as part of the national bank council’s resolution of April 20, 2022, which came into force on Wednesday.

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Some Ukrainian banks have already adopted these restrictions, according to various sources. PrivatBank, the largest commercial bank in Ukraine, reportedly prohibited its clients from buying BTC with UAH in mid-March.

The restrictions come as a surprise, as the Ukrainian government has been actively working to legalize cryptocurrencies amid martial law. In March, Ukrainian President Volodymyr Zelenskyy signed a law to establish a legal framework for the country to operate a fully regulated cryptocurrency market.

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