Ukraine Bans Bitcoin Purchases With National Currency Amid Martial Law

Ukraine’s central bank is prohibiting BTC buys with the hryvnia in an attempt to prevent what it calls “unproductive” capital outflows.

• The Ukrainian central bank has banned bitcoin purchases with the national fiat currency.
• The bank said the move seeks to prevent “unproductive” capital outflows in a bid to preserve the health of the country’s FX market.
• In addition to cryptocurrency buys, the new rules also target electronic wallet deposits, FX transactions and travel payments.

The Ukrainian central bank is now prohibiting citizens from purchasing bitcoin with the local fiat currency, the hryvnia (UAH), as it attempts to curb capital outflows under martial law.

Under the new rules, the National Bank of Ukraine (NBU) is also limiting the amount of cryptocurrency people can buy with foreign currencies – an equivalent of UAH 100,000 (about $3,390) per month.

The restrictions are not exclusive to Bitcoin. The new directives imposed by the NBU cover a slew of asset purchases and “quasi cash” transactions, including replenishment of electronic wallets, brokerage or foreign exchange (FX) accounts and payment of traveler’s checks.

“The relevant changes will help improve the foreign exchange market, which is a necessary prerequisite for easing restrictions in the future, as well as reducing pressure on Ukraine’s international reserves,” the bank said in a statement Thursday.

NBU said the move is necessary because even though the FX market has been mostly balanced over the past month, “significant volumes” of foreign currency purchases by banks seeking international settlements “create some additional pressure.”

Regular payments abroad and locally for goods and services do not fall under the umbrella of new restrictions, the bank added, as it seeks to limit “quasi cash” transactions that are used to circumvent restrictions imposed by the NBU and lead to “unproductive” capital outflows.

The bank said the Ukrainian government adopted the changes in an NBU board resolution from April 20, which went into effect on the same day.

— With assistance by Alyona Nevmerzhytska.