Ukraine has banned residents from buying digital assets using local currency

Ukraine’s central bank has banned residents from buying digital assets using local currency. Citizens can only buy cryptocurrency with foreign currencies for a maximum of $3,400 per month. According to the National Bank of Ukraine, this will help prevent capital flight (NBU).

Ukraine’s central bank has banned residents from buying digital assets using local currency

Since Russia’s invasion, Ukraine has received millions in cryptocurrency donations. However, in order to prevent capital flight, the government has banned its residents from buying cryptocurrency with local currency.

Ukraine’s central bank has banned residents from buying digital assets with local currency to prevent “unproductive capital outflows”.

In Ukraine, people can only buy cryptocurrency with foreign money up to 100,000 Ukrainian hryvnia ($3,400) per month, according to the National Bank of Ukraine (NBU). According to the central bank, this will help prevent capital flight.

Capital flight can have a negative impact on a country’s currency. Because millions of people have fled Ukraine since Russia’s invasion in February, an outflow of financial assets poses a significant risk, and the Ukrainian government is working hard to keep the hryvnia stable.

According to a statement released by the NBU on Thursday, “the National Bank of Ukraine has emphasized restrictions on cross-border activities of individuals in order to prevent unproductive money outflows from the nation under martial law.”

Nevertheless, despite the decision to prevent capital flight, the Ukrainian government remains mostly pro-crypto. Ukrainian President Volodymyr Zelensky last month approved a “virtual assets” law, legalizing bitcoin assets in the country.

The move was made to allow Ukraine to play a “critical role in the defense process”, according to then Deputy Minister of Digital Transformation Alex Bornyakov.

Non-governmental organizations and volunteer groups around the world have donated millions of dollars in cryptocurrencies since Russia invaded Ukraine in February. The funds will be used to help Ukraine’s military, which is much smaller than Russia’s.

Bornyakov claims around $100 million has now been moved. According to Elliptic, a blockchain analytics firm, digital assets are used because they are quick and easy to move across borders.

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Also read: Crypto.com announced a four-year donation to the Digital Currency Initiative