National Bank of Ukraine Bans Cryptocurrency Purchases Using Local Currency

The National Bank of Ukraine has put new restrictions on cross-border transactions in place. The country has temporarily banned crypto purchases using local currency along these lines. 

A few days ago, the National Bank of Ukraine published a statement saying that cryptocurrency purchases in local currency were currently prohibited. 

The ban has been implemented under martial law, which has been since Russia invaded Ukraine. While martial law is in effect, this is part of a larger strategy to keep capital within the country's boundaries.

According to the National Bank of Ukraine statement, individuals will now be allowed to purchase assets worth up to UAH 1,00,000 per month in their own foreign currency, directly converted into (exchanged for) cash through quasi cash transactions. 

The same restriction applies to cross-border P2P transfers.

Payment cards issued to accounts opened in foreign currency can be used to conduct the above non-cash transactions. 

Reminding its users of quasi cash transactions, the bank said they include replenishment of electronic wallets, brokerage or forex accounts, payment of traveller's checks, purchase of virtual assets, etc.

Currently, the National Bank of Ukraine allows cashless transactions with payment cards issued for bank accounts opened in foreign currency.

According to the bank, these changes will help improve the situation in the foreign exchange market, which is a prerequisite for easing restrictions in the future and reducing pressure on Ukraine's international reserves.

The bank confirmed that the demand for foreign transactions had risen a lot due to the martial law, which has pushed millions of civilians to flee Ukraine. But the bank cannot afford "unproductive capital outflows", such as cryptocurrency investments.

Ukraine's invasion by Russian forces led to a change in the cryptocurrency scenario in the country. 

Last month, Ukraine legalised cryptocurrency. Ukraine formally determined that the legal status, classification, ownership, and regulations of virtual assets are regulated by the National Commission on Securities and the Stock Market. 

Meanwhile, Ukraine has received over $100 million in crypto donations since the Russian invasion.