Although Ukraine has accepted over $100 million through cryptocurrency donations since the beginning of the war and became the first country in the world to ever introduce its official cryptocurrency donation addresses, not all Ukrainian institutions are 100% in favor of fully accepting cryptocurrencies.
Ukrainians can still buy cryptocurrencies, but only with foreign currency
While the National Bank of Ukraine (NBU) has no problem with cryptocurrencies themselves, it does have a problem with buying cryptocurrencies with its home currency, the hryvnia. Thus, this move may not be direct action against cryptocurrencies, but rather a form of protecting its domestic currency.
This is because with the purchase of cryptocurrencies there is an outflow of capital abroad and this is something that a country in a state of war cannot afford. So cryptocurrencies, yes, but only using foreign currency and even here there is a limit of approximately $3300.
For Ukraine, the capital outflow is a big problem because there is currently a situation where millions of Ukrainians have been forced to leave their country. Naturally, as a result of this, they are forced to spend their money abroad and, therefore, the exchange of hryvnias for various foreign currencies is increasing in large numbers.
Buying cryptocurrencies can then have 2 reasons. One is a universal tender where especially Bitcoin with more and more adoption can serve as a tender and the second reason is purely investment and serves to hedge one’s assets in times of war uncertainty.
The new restrictions by the National Bank of Ukraine have taken the entire crypto sector by surprise, as the Ukrainian government had been actively working to legalize cryptocurrencies in the previous months.
In March, President Volodymyr Zelensky signed a law to develop a broad regulatory framework for digital assets. And so we can only hope that Ukraine’s view on cryptocurrencies is still the same, and this move is only a step to protect its currency from depreciation.