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Ukraine Bans Bitcoin Purchases – Central Bank Fears “Unproductive Capital Outflows”

 


The Central Bank of Ukraine (NBU) is now taking further measures to prevent the outflow of capital from the domestic economy in times of war, so severe restrictions on the use of cryptocurrencies are now being imposed.


As the National Bank of Ukraine (NBU) reported on Thursday , certain restrictions on international payments will apply with immediate effect, which, among other things, prohibit the country's residents from purchasing cryptocurrencies such as Bitcoin ( BTC ) with their own national currency hryvnia (UAH).


The Ukrainians are therefore only allowed to buy Bitcoin and Altcoins with foreign currencies, although there is also a monthly limit of 100,000 UAH or almost 3,000 euros. This limit also applies to other international peer-to-peer transactions.


As the central bank explains, it sees crypto investments as a type of "cash transactions", which is why the same regulations should apply to them as to international online payments, foreign currency transactions and international transfers. With the restrictions on such transactions, the NBU wants to ensure that there are "unproductive capital outflows" while Ukraine is at war.


"The relevant changes will help us better control foreign currency and foreign trade, which is a prerequisite for easing these restrictions in the future," the central bank said.


In this context, the NBU points out that the demand for international transactions has increased sharply in times of war, as millions of Ukrainians have fled abroad and are dependent on money from home. Nonetheless, the central bank remains adamant that the “unproductive capital outflows”, including investments in cryptocurrencies, are overall doing more harm than good:


“Such cash-like transactions are made to circumvent existing National Bank restrictions, primarily to invest abroad, which is actually prohibited under martial law. Accordingly, we interpret the transactions in question as unproductive capital outflows.”

According to the NBU, the Ukrainian government passed the restrictions on April 20, 2022 under a new resolution that came into force back on Wednesday.

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