Ukraine bans cryptocurrency purchases in local currency

Ukraine’s central bank has banned its citizens from buying digital assets in local currency in an effort to prevent “unproductive capital flows” according to statement issued yesterday.

The National Bank of Ukraine (NBU) said that citizens can now buy cryptocurrency only with foreign currencies worth up to 100,000 Ukrainian hryvnia ($3,400) per month. This will help stem capital flight, according to the central bank.

Capital flight can hurt the country’s currency. With millions of people leaving Ukraine since the Russian invasion in February, the exodus of financial assets is a real possibility and the Ukrainian government wants to stop this and keep the hryvnia stable.

“The NBU clarified the restrictions on cross-border operations to citizens in order to prevent the unproductive outflow of capital from the country under martial law,” the NBU statement said on Thursday.

“Individuals will be able to purchase assets that can be directly converted (exchanged) for cash and that belong to quasi-cash transactions, using only their foreign currency.”

The statement added that “semi-cash transactions” include the renewal of electronic wallets, brokerage or forex accounts, and payment of travellers’ checks.

But despite the move to prevent capital flight, the Ukrainian government is largely crypto-friendly. Last month, Ukrainian President Volodymyr Zelensky Occurred The “Virtual Assets” Law that legalizes crypto assets in the country. Alex Bornyakov, deputy minister for digital transformation, said at the time that the move was intended to help play a “vital role in Ukraine’s defense operation.”

Ukraine has received millions of crypto donations from around the world from NGOs and volunteer groups since Russia invaded the country in February. Donations are aimed at supporting the Ukrainian army – which is smaller than the Russian army.

Over $100 Million Sent Now, according to to Bornakov. Blockchain analytics firm Elliptic said the digital assets are being used because they are fast and easy to transmit across borders.