The National Bank of Ukraine has imposed additional restrictions to prevent citizens from buying crypto-assets abroad with the national fiat hryvnia. This is an effort to reduce capital outflow amid an ongoing military conflict with Russia.
The central bank issued a notice highlighting the introduction of certain restrictions on cross-border transactions that private individuals can make. It aims to curb the unproductive outflow of capital from Ukraine under martial law. The regulator said that citizens will be allowed to acquire assets that can be directly converted to cash or quasi cash transactions. They can use only their own foreign currency for up to $3,400 per month. Limit is also applicable to cross-border peer-to-peer (P2P) transfers. Non-cash transfers can be carried out with cards issued to accounts in foreign currency.
The monetary authority clarified that quasi cash transactions include a range of operations like replenishment of electronic wallets (forex accounts), payment of traveler’s checks, and purchase of virtual assets. The new set of measures comes after Privatbank, Ukraine’s largest commercial bank, stopped hryvnia transfers to crypto exchanges. It was an effort to facilitate financial support for Ukrainian refugees abroad.
Ukraine’s central bank says the new rules will help improve the country’s foreign exchange market. The measures will reduce the pressure on Ukraine’s foreign currency reserves. The Ukrainian foreign exchange market processed up to $1.7 billion in transfers in March alone. The authority highlighted that demand for these settlements arises from the increased use of cards issued by Ukrainian banks to accounts in national currency for the purchase of goods and services outside the country. Bank cards are also used in quasi cash transactions which are mainly carried out to circumvent restrictions. It’s employed in investment abroad which is presently prohibited under the current martial law.