The Central Bank of Ukraine has imposed additional restrictions on international transactions, which will prevent Ukrainians from using the national fiat currency to buy crypto assets abroad. The measures are aimed at reducing capital outflows in the event of an ongoing military conflict with Russia.
Ukrainian citizens are not allowed to buy cryptocurrencies from local currency accounts abroad
The National Bank of Ukraine (NBU) has issued a circular detailing certain restrictions on cross-border transactions that private individuals can carry out. The regulator said the move was aimed at curbing “unproductive capital outflows from the country under martial law.”
Residents of Ukraine will be allowed to purchase assets that can be directly converted into cash or quasi-cash transactions, using only the equivalent of 100,000 hryvnia ($3,400) per month in foreign currency. This restriction also applies to cross-border peer-to-peer (P2P) transfers. These non-cash transfers can be made using cards issued to foreign currency accounts.
The monetary authority detailed that quasi-cash transactions include a range of operations, such as the top-up of e-wallets or foreign exchange accounts, the payment of travelers’ checks, and the purchase of virtual assets. The new rules come after Privatbank, Ukraine’s largest commercial bank, stopped transferring hryvnia to cryptocurrency exchanges in March.
To facilitate financial support for Ukrainian refugees abroad, the NBU allows hryvnia account holders to make cross-border P2P transfers within a monthly limit of 100,000 hryvnia. However, the central bank emphasized a temporary ban on quasi-cash transactions in the national currency on these accounts.
The National Bank of Ukraine insists that the rules will help improve the country’s foreign exchange market, arguing that they are a prerequisite for easing restrictions in the future. The regulator also believes that the measures will reduce pressure on Ukraine’s foreign exchange reserves.
The Ukrainian foreign exchange market already processes large volumes of foreign currency purchased by local banks for settlement with international payment systems. Such transfers reached $1.7 billion in March. The demand for these settlements stems from the increased use of Ukrainian bank-issued cards in national currency accounts for the purchase of goods and services abroad.
Bank cards are also used for quasi-cash transactions, mainly to circumvent its restrictions, especially for overseas investments that are prohibited under the current martial law, the NBU said. However, the bank noted that the new restrictions do not apply to the use of cards to pay for goods and services in Ukraine and abroad.
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