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Ukraine bans Bitcoin purchases with native foreign money amid martial regulation

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The National Bank of Ukraine (NBU) continues taking measures to stop capital outflows amid martial regulation by imposing main restrictions on cryptocurrency purchases.

The Ukrainian central financial institution formally introduced Thursday a set of restrictions on cross-border operations, prohibiting people from shopping for cryptocurrencies like Bitcoin (BTC) with the nationwide fiat foreign money, the hryvnia (UAH).

Ukrainians at the moment are allowed to purchase Bitcoin and different cryptocurrencies solely with international foreign money, with complete month-to-month purchases restricted to 100,000 UAH ($3,300). The related restrict additionally applies to worldwide peer-to-peer transactions.

According to the announcement, the NBU has deemed crypto purchases as “quasi cash transactions” alongside operations like digital pockets deposits, international alternate transactions and journey funds. By adopting restrictions on such transactions, the central financial institution goals to stop the “unproductive outflow of capital” from the nation amid martial regulation.

“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 NBU wrote.

The central financial institution admitted that the necessity for worldwide transactions has massively elevated amid martial regulation, with hundreds of thousands of residents being pressured to depart Ukraine. However, the NBU can’t afford “unproductive capital outflows,” which embrace investing in cryptocurrencies, the announcement notes, including:

“Quasi cash transactions […] are mainly carried out to circumvent the current restrictions of the National Bank, in particular for investing abroad, which is prohibited under martial law. Therefore, the relevant transactions should be interpreted as leading to unproductive capital outflows.”

According to the NBU, the Ukrainian authorities adopted the related adjustments as a part of the NBU board decision from April 20, 2022, which entered into drive on Wednesday.

Related: Ukraine’s largest financial savings financial institution halts Bitcoin buys with hryvnia — Report

Some Ukrainian banks have adopted such restrictions already, in line with a number of sources. PrivatBank, the most important industrial financial institution in Ukraine, reportedly prohibited its prospects from buying BTC with UAH in mid-March.

The restrictions apparently elevate eyebrows because the Ukrainian authorities has been actively working to legalize cryptocurrencies amid martial regulation. In March, Ukrainian president Volodymyr Zelenskyy signed a regulation to determine a authorized framework for the nation to function a regulated crypto market.