The National Bank of Ukraine (NBU) issued a notice on April 20 about imposing specific rules, regulations and restrictions on cross-border transactions made by its citizens. This sudden change in the banking regulations in Ukraine comes after the imposing of martial law in the country after Russia launched a full attack and invasion on the former.
The martial law to prevent Ukrainians from buying cryptocurrencies
During martial law, the government has introduced specific stringent rules for bank operations, preventing Ukrainian from buying crypto assets and currencies abroad with fiat currencies or local currency accounts. This new measure has been introduced to cease the unproductive flow of capital funds outside the country. The National Bank of Ukraine has brought forth these measures to achieve specific goals, such as streamlining financial operations and preventing the illegal flow of capital from the country’s account.
Contemplated by experts, these regulations will improve the country’s foreign exchange market, thereby easing restrictions in the future. Moreover, it will reduce the pressure on Ukraine’s foreign currency reserves.
The new provisions will lead to financial relief for Ukrainians
These new measures imposed on Ukrainian nationals prohibit the citizens from conducting international transactions using the hryvnia’s local currency. However, Ukrainians will be allowed to acquire assets that can be easily converted into cash or quasi cash transactions using only the local currency. The set limit for the same is equivalent to 100,000 hryvnias or $3400 per month. This limit applies to cross-border peer-to-peer transfers as well. Moreover, the quasi-cash transactions will cover many operations like replenishing electronic wallets, reloading forex accounts, paying for traveller’s checks, and purchasing other virtual assets. The Ukrainian government has made such provisions to enable financial relief.
These restrictions also come from a high volume of foreign currency purchases undertaken by local banks, as much as $1.7 billion for settlements with international systems in March. For example, Privatbank, the largest commercial bank in Ukraine, temporarily stopped transfers conducted in its national currency for exchanging digital assets and currencies due to the imposed martial law.