More Ukrainians May Turn to Crypto After the New Fiat Restrictions

The National Bank of Ukraine (NBU) has made new regulations in reaction to the country’s economy’s shifting fundamentals due to a protracted armed war with Russia. On July 21, the monetary authority put new restrictions on banking activities using the national fiat currency and depreciated the Ukrainian currency, Hryvnia (UAH), by 25% against the strong dollar.

Banks can only sell non-cash foreign currency to their customers per the new regulations for private individuals, provided they deposited the sums for at least three months with no provision for contract termination.

The NBU has reviewed the initial 50,000 UAH ceiling for withdrawals from payment cards with a weekly limit of 12,500 ($340). It also cut the peer-to-peer transfers abroad from cards issued by Ukrainian banks from 100,000 UAH (approx. $2,700) to 30,000 UAH ($800). And the limit for cross-border settlements with hryvnia cards has been set at 100,000 per month.

Kirill Shevchenko, governor of the NBU, reaffirmed that all measures put in place since the conflict’s start are short-term and to enable the economy to survive. 

The latest NBU restrictions may lead to a surge of Ukrainians’ interest in cryptocurrencies, opined Mikhail Chobanyan, the founder of the Ukrainian crypto exchange Kuna, in a news blog. He said, “We expect an increase in turnover and use of cryptocurrencies. In Europe, 100,000 hryvnias is nothing,” the entrepreneur added.

Chobanyan further pointed out that the new restrictions would make it harder for volunteers to do their jobs because most of the aid is acquired using cards from Ukrainian banks that private individuals hold.

“Now we will completely switch these flows to crypto,” said Chobanyan, who described the central bank’s policy as aggressive and warned that Ukrainian banks and the state budget would be the losers.