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Ukraine’s central bank sees both promises and threats in Bitcoin

March 9, 2023 Coin Telegraph

Banks

The central bank of Ukraine sees crypto as a threat to macro-financial stability and a promising opportunity for better payments at the same time.

The National Bank of Ukraine (NBU) has expressed a mixed stance on cryptocurrencies like Bitcoin (BTC) after a year of war in the country.

The central bank of Ukraine sees both good and bad in virtual assets, taking a more skeptical approach to crypto due to financial and economic issues caused by the invasion, according to the NBU press office.

In April 2022, the NBU prohibited citizens from buying cryptocurrencies like Bitcoin using the national currency, the hryvnia (UAH), only allowing such purchases via foreign currency accounts. The central bank also set a monthly limit on such purchases, prohibiting Ukrainians from buying more crypto than worth UAH 100,000 ($3,300) per month. The restrictions also apply to cross-border peer-to-peer transactions.

The administrative restrictions involving operations with cryptocurrencies in Ukraine are temporary, a press officer for the NBU told Cointelegraph on March 9. The limits will be “gradually weakened as the functioning of the economy and financial market of Ukraine normalizes,” the NBU said, adding:

“The National Bank is taking part in building a system of transparent and understandable regulation, which will contribute to the development of fair and efficient circulation of virtual assets.”

According to the regulator, the specified restrictions were necessary for Ukraine in order to stabilize the situation in the foreign exchange market and preserve macro-financial stability.

“Transactions with cryptocurrencies can be used to bypass currency regulation, in particular — as a channel for unproductive capital outflow from the country, which currently poses threats to macro-financial stability,” the NBU representative stated.

Ukraine’s central bank also sees risks of “substitution of the national currency and the emergence of parallel money circulation.” According to the NBU, such risks are especially high during the war and are beyond the effective control of the regulator. “This can pose a threat to the monetary sovereignty of the state,” the NBU spokesperson noted, adding:

“To minimize such risks, especially during the full-scale war, the National Bank will take a strong position on preventing the narrowing of the scope of application of the hryvnia as the only legal means of payment in Ukraine.”

Despite taking a cautious approach to crypto during the war, Ukraine’s central bank is still bullish on technological innovations related to virtual assets. According to the NBU, there are many promises associated with crypto, including better access to financial services, competition in the field of payment services, the attraction of investments, crypto donations and other benefits.

As such, the central bank supports the need to create “civilized conditions for the development of the virtual assets market in Ukraine,” the NBU press office stated.

The latest remarks from the NBU came soon after Yurii Boiko, commissioner of Ukraine’s National Commission on Securities and Stock Market, declared that the war had no impact on the authority’s regulatory stance. According to the official, Ukraine has continued to follow in the footsteps of the European Union concerning digital asset laws.

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March 8, 2023 Bitcoin.com

Russia-Ukraine war: How both sides of the conflict have used crypto to win

March 5, 2023 Coin Telegraph

Borderless Technology

While tens of millions worth of crypto were donated to Ukraine in the last year, pro-Kremlin groups have also leveraged digital currencies to buy military supplies and spread propaganda.

In the Russia-Ukraine war, both sides of the conflict have been leveraging cryptocurrencies to achieve the upper hand.

Pro-Ukraine causes have collected around $200 million from crypto donations, showing how borderless and uncensorable money could be useful in time of emergency.

But the Russian side has taken advantage of crypto too: a total of about $5 million was raised by pro-Kremlin groups and propaganda outlets in the course of the invasion, as revealed by a recent Chainalysis report. These entities are small grassroot organizations that have used crypto to bypass western financial sanctions.

“We're really looking at individual actors. So somebody who's on the front, somebody who's trying to help provide more military resources to the front [...] things like bulletproof vests or drones,” explained Andrew Fierman, head of Sanctions Strategy at Chainalysis and one of the authors of the report.

But those numbers don’t take into account ransomware attacks: As shown in Chainalysis data, in the course of 2022, over $450 million were paid to these entities, the majority of which were believed to be based in Russia. Some of them, like the cybercriminal group Conti, have openly supported the Russian government in its war effort.

“When it comes to ransomware payments, a lot of the time bad actors have some sort of political agendas behind what they're doing,” Fierman pointed out.

To find out more about the impact of crypto in the Ukrainian conflict and how Russia leveraged it to promote its cause, check out the full interview on our YouTube channel and don’t forget to subscribe!

Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

March 5, 2023 Coin Telegraph

Coin Telegraph

Following the temporary suspension from Ukraine’s central bank, crypto exchanges like Binance and Kuna made official announcements informing investors about the inconvenience.

Ukraine temporarily suspended the use of its national currency, the hryvnia, via banking cards for fiat deposits and withdrawals on crypto exchanges. While the move immediately impacted how investors move funds to and from exchanges, Binance reminded users about how peer-to-peer (P2P) services come in handy when trading cryptocurrencies.

Following the temporary suspension from Ukraine’s central bank, crypto exchanges like Binance and Kuna made official announcements informing investors about the inconvenience. Michael Chobanian, the founder of local crypto exchange Kuna, acknowledged the service disruption. However, he said he would explain the nuances of the development at a later stage.

*Kuna founder Michael Chobanian recommending Bitcoin as Ukraine halts hryvnia use on crypto exchanges. Source: Telegram*

Chobanian further pointed out how such regulatory decisions have no impact on the Bitcoin (BTC) ecosystem and added that (rough translation):

“Regarding the hryvnia card and input/output to the exchange. Yes, it doesn’t work … We are looking for ways out of the situation, under the threat of stopping the entire Ukrainian crypto/card UAH market.”

Binance, too, acknowledged the problem as regulators suspended the use of hryvnia on crypto exchanges. However, Binance had an alternative solution as it recommended (rough translation):

“We suggest using the P2P service so that you can continue to use Binance comfortably.”

The crypto exchange utilized the occasion to inform users that peer-to-peer services allow users to exchange crypto and fiat currencies directly with other users without the need for a middleperson like banks.

Ukraine’s anti-crypto stance comes as a shock considering the country netted over $70 million in crypto donations since the start of the Russian-Ukrainian conflict.

*Cryptocurrencies donated to Ukraine wallets provided by the Ukrainian government. Source:* *Chainalysis*

“If we used the traditional financial system, it was going to take days [...] We were able to secure the purchase of vital items in no time at all via crypto, and what is amazing is that around 60% of suppliers were able to accept crypto, I didn’t expect this,” said Ukrainian deputy digital minister Alex Bornyakov on Feb. 24.

Ukraine