Within the framework of the Martial Law decreed since last February 24 in Ukraine, the Central Bank of that country announced a set of restrictions on cross-border operations, prohibiting people from buying bitcoin (BTC) with the local currency, the hryvnia ( UAH).
In a release published this April 21, the agency pointed out that, from now on, the Ukrainians they can only buy bitcoin and other cryptocurrencies with foreign currencies. Total monthly purchases are limited to 100,000 UAH (about $3,300). This is a limit that also applies to international peer-to-peer (P2P) transactions.
In an amendment to a resolution approved at the end of February, the National Bank of Ukraine explains that the measures are taken in order to prevent the outflow of unproductive capital from the country. A situation that has accelerated in the midst of the war unleashed since the invasion that Russia carried out in its territory.
The war has generated a dizzying increase in the number of citizens leaving Ukraine to different parts of the world, especially to neighboring Eastern European countries. Calculations indicate that by April 13, 2022, more than 4.7 million Ukrainians They had fled their nation.
This massive displacement has generated a growth in settlements with international payment systems. All as a consequence of the use by Ukrainian citizens of “transactions of quasi cash«.
“Quasi-cash transactions are carried out mainly to circumvent the current restrictions of the National Bank, in particular to invest abroad,” says the agency. Therefore, “they should be interpreted as leading to unproductive capital outflows.”
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In this type of operations the purchase of cryptocurrencies with UAH, the local currency, is included, in addition to transfers to digital wallets and foreign currency transactions. For these activities, people often use cards issued by Ukrainian banks to accounts in national currency outside the country, in order to make purchases of goods and services.
The foregoing causes an increase in the volumes of foreign currency purchases by Ukrainian banks, for settlements in international payment systems. This creates additional pressure on the foreign exchange market.
Pressure levels are already “critical”, according to the National Bank of Ukraine, taking into account the millions of citizens who have been forced to go abroad temporarily.
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In particular, in March, the volume of net foreign exchange transfers from Ukrainian banks in favor of international payment systems amounted to USD 1.7 billion. And from the beginning of the month and until April 18 to USD 900 million
National Bank of Ukraine.
The Bank hopes that these changes will improve the foreign exchange market and reduce pressure on Ukraine’s international reserves. The measurement is suspended once the balance stabilizes.
The purchase of bitcoin is prohibited shortly after its legalization
The ban on the purchase of bitcoin, using the local currency of Ukraine, occurs at little more than a month of having legalized the cryptocurrency.
As reported by CriptoNoticias, on March 16 President Volodímir Zelenski enacted the Law on Virtual Assets, which gives legal support to bitcoin and other cryptocurrencies. All this within the framework of the flow of donations in crypto assets that the government has been receiving to face the armed attack launched by Russia.
Legalization has given rise to massive use of bitcoin on ukrainian territory. Cryptocurrencies have been used by the authorities to finance many of their activities, including those of war.
For their part, those fleeing from Ukraine have the option of taking their bitcoins with them when crossing the border. In this way, they circumvent some banking blockades imposed in that country since the beginning of the conflict, among them the prohibition of making operations with electronic money.
It is possible that the convertibility of bitcoin with respect to many national currencies has contributed to the increased interest of Ukrainians in buying BTC, an action that is now limited by this new measure.