Bitcoin Forum

Ukraine bans Bitcoin purchases with local currency amid martial law (https://coindesk.cc/ukraine-bans-bitcoin-purchases-with-local-currency-amid-martial-law-90988.html)


I do not check the value of hryvnia but I think the war in Ukraine would have caused persistence rise in price of goods and services in Ukraine, which means inflation. NBU restrict Hryvnia to be used to purchase bitcoin a d altcoins but allowed foreign currencies to be used. I still do not understand the reason behind this because also foreign currencies have much to contribute to inflation if its reserves are depleting.

What could be the benefit of the NBC move to allow Ukrainians to only use foreign currencies to purchase cryptocurrencies and not allowing their own local currency to be used? But I think with this, only few people will have access to foreign currencies compared to those that will have access to local currency, which means a way to reduce Ukrainians that are buying cryptocurrencies.

I'd imagine this is part of a much bigger plan by Ukraine to try to prevent another party from destroying the value of their currency (at all of further).

I think it's well known that a lot of wars have used a strategy of counterfeiting currencies to try to weaken your enemy's buying power.

There's also the chance pumps and dumps could occur on the currency to try to make it's value unstable and this could've been a way to protect against that - I think a lot of Ukraine's industry is less developed though so this will probably have less of an effect on them.

It might also be a good strategy for getting citizens to value their native currency as it'll be much easier to rebuild their economy if they still have a currency they themselves can control (to set things like inflation).

Having a monthly capping and not using their currency means that they probably want to strengthen the power of their money. So they don't care how much of a volume that Bitcoin with the buy and sell takes place, it's all about what currency they are trading with. Maybe their value of money has diverted into something that this is one of the solutions that they could think of.

The price of UAH is going extremely up and down making the whole thing super volatile therefore The bank is trying to ban these things to prevent the engagement of people to keep the investments in the banks, but I do not think it's a good move as well since :
1. People have very limited option right now thus they need to invest in something which can provide them with profits and using third party sites might not be a good option since they are not just : expensive but also there is a matter of trust around them as well.
They also suspended e-cash transactions  https://www.google.com/amp/s/www.cnbc.com/amp/2022/02/24/ukranian-bank-suspends-e-cash-transfers-bolstering-crypto-use-case.html (https://www.google.com/amp/s/www.cnbc.com/amp/2022/02/24/ukranian-bank-suspends-e-cash-transfers-bolstering-crypto-use-case.html)
The move seems to be a good one for the government but undeniably its causing difficulties to the people around since cryptos are a big deal in Ukraine and people are very actively involved in buying/selling.

Pretty simple, it's about controlling the currency.
If some Ukrainians already have $ them buying bitcoin will not affect the hryvnia parity at all, that is something happening outside, if, on the other hand, they buy BTC or any other thing with hryvnias that will make the currency drop, by restricting this you try to limit the damage.
Russia has gone overboard with control not allowing citizens to purchase foreign currency at all despite not being ravaged by war, and it does make sense temporarily but in the long term both a ban and a restriction will prove to be worthless, it will just make the fall harder.

That's why I've always said a country in an economic crisis will never embrace BTC, it's like you suddenly import hard currency for your useless paper, exactly why the whole Weimar Republic case is still studied, imagine doing that not to pay some debt but to completely replace your monetary mass, it's suicide.

maybe they are doing this to protect their currency,,, because at this time their financial condition is very chaotic coupled with global inflation ... so it's only natural that the central bank of Ukraine issued a regulation like this

I will agree with you, I noticed Russia did it and in few days or weeks later, the Russian rubles increased in price. But I am still just confused, what I thought before is that a country like to protect its foreign reserves, if the people in a country are demanding more of the foreign reserve, the central bank will not have option than to decrease the price of the local currency so to protect the foreign reserve depletion, which means that would still result to inflation or devaluation of local currency. If foreign reserves are used by Ukrainians, this could result to the depletion of foreign reserves in Ukraine.

I was later thinking Ukraine received donations in bitcoin, altcoins, US dollars, Euro, Pounds and other foreign currencies, probably could also be one of the reasons or the main reason that NBU restricted hryvnia to be used to buy cryptocurrencies because they have a lot of foreign reserve as a result of donation. I do not include bitcoin and altcoins as foreign reserve, though you know that.

Central bank foreign reserves have nothing to do with people's personal savings or stash under the bed reserves.
The main issue for a central bank when trying to protect their currency is to stop UAH from being converted to either $ or BTC, stopping people from converting $ into BTC ads nothing to their national currency, it just changes the form, just like some country would change their reserves from $ to euros.

Your concerns would have been right if they would have allowed purchases of bitcoin with UAH till that limit, but that's not the case (https://bank.gov.ua/ua/news/all/natsionalniy-bank-zaprovadjuye-dodatkovi-zahodi-dlya-zapobigannya-neproduktivnomu-vidtoku-kapitalu).


Receiving foreign currency strengthens the UAH, allowing UAH to be converted without limit to either $ or BTC would have negated all the positive effects donations had.
Again don't think that personal wallets act like the CB central reserve.

I would say that the normal rules do not apply to a country at war and they need some leniency. This is a people who are fighting Russia to survive and face being wiped out because of this evil war. Right now all of their attention is focused on stabilizing their economy while trying to defend against the most sadistic type of attackers on the planet. Their government does not have time to worry about the intricacies of trying to create new financial regulations and rightfully so, when their citizens are getting slaughtered all over the country. It is also a method that can be used to infiltrate money from the enemy into subversive elements of their own country outside of the existing banking structure that they can oversee.

I think this goes beyond being a good or a bad move by the national bank of Ukraine, this is the only move they have at their disposal and they are making use of it, personally I have never been in favor of such restrictions because at that point it is obvious the economy is in trouble, however unlike with what we see in countries like Venezuela in which this was caused by the mismanagement of the government, this case is different, their economy is at risk because of a sudden war, so under the circumstances it is understandable they are doing what they can to protect their economy, however assuming Ukraine gets to keep its independence after the war I would hope such a measure to be suspended as soon as it was reasonable to do so.

Wartime or not, it isn't good policy to hold Ukrainians' funds hostage. Hypothetically, what happens if Ukraine loses the war and Russia overtakes the banking system, what happens to UAH? Probably becomes worthless, and citizens that weren't able to withdraw any funds outside of the monthly cap are out of luck. If currency was actually backed by something, or decentralized, none of this would be an issue. This isn't Ukraine's fault, rather an indictment of fiat currencies as a whole. There is no guarantee in sustainability. You aren't really in control of your funds.

Some days ago, they received donations from many supporters including some pledge members of the forum and that gave me a confidence that they may be the new El salvador. It is not as if they are threatened from other countries that have been sanctioned.
I'm only seeing buy, what about selling, will there be an implications if one decide to sell bitcoin to hryvnia, will there be a repercussions? In war people will need money and right now is only those with savings and investment will spend, selling a part of bitcoin to the local currency will be the fastest and easiest way if there is no penalty to that though.

Capital controls are not ideal but its a war, its hard to blame any country desperate to take moves to continue its survival.   Many countries at times of war or in extremes have used capital controls, probably all the major economies of the world.   For some regimes its routinely done over decades alongside many other controls upon citizens to deny any freedom, I would just hope Ukraine does relax and allow freedom back to its citizens upon its return to normal conditions.
  I switched a few of my online subscriptions to buy or use Ukraine currency when paying that bill since its all converted for me on a CC bill it doesnt require much, hopefully it helps them to have buyers in the forex market and actually it lowers the bill for me as western prices are usually higher.

Recently russia tried to denominate its natural gas purchases in its native ruble, in an effort to boost demand and increase its value.

On the opposite end of the spectrum, banning bitcoin purchases with ukraine's native currency, is likely to reduce demand and increase inflation.

We might deduce that this move is made to protect ukrainian citizens from holding ukraine's native currency which could fail soon.

The policy is intended to encourage the use of foreign currencies, which would be deemed more stable and reliable than ukraine's currency in the post invasion era.

This actually seems to me that like they are encouraging their citizens to hold native currency isnt it by only letting them buy another 'currency' in this case bitcoin with foreign currency. They are probably already aware that most of their citizens have switched to foreign currency because of this war so this is probably one of their way though

or is my take on this completely wrong? this is what it seems to me though

If the following quote in OP is correct.


Its not a complete ban on bitcoin purchase.

They're only banned from buying it with ukraine's native currency.

It would seem targeted at reducing transaction volume of ukraine's native currency, while encouraging the usage of foreign ones.

This is a restriction rather than a complete ban on bitcoin, not just limited to bitcoin it covers a wide range of asset transactions including cash like deposit to e-wallet, brokerage account or forex trading...This move by the Ukrainian government was to prevent money from leaving the country during the war. This is sad when they declare war on their citizens and also on the crypto market, the community has helped them receive large donations recently.

I heard about this earlier on Twitter. Depending on who writes the article, many journalists who want click bait will type it out in a way to make it seem like they are after crypto however the truth is they are not just limiting crypto transaction but all other currencies including Euro and US dollars.

I don’t like how these journalists spin some articles by saying negative things about crypto. Most likely it gets more views when the headline is “Ukraine puts a limit on Bitcoin” rather than the truth and how “Ukraine puts a limit on all currencies”.

I have actually created a thread (https://bitcointalk.org/index.php?topic=5390370.msg59569962#msg59569962) on this last month because I found it surprisingly ironic that almost immediately after the president signed the crypto-friendly bill, On Virtual Assets, into a law, there were restrictions happening on the purchase of Bitcoin using the local currency.

This might appear bad for the people of Ukraine. However, tough times call for tough measures. And I think I understand that while this is an undesirable measure, it is timely. This is not the time to cause more outflow of the local currency. This is simply not the time to add more pressure to hryvnia. The country is at war against an invader. It doesn't help to contribute more pressure to the already suffering local economy.

When the country is threatened with high inflation then the best and fastest solution is to immediately legalize cryptocurrencies, what the ukraine government is doing is the right thing, the country is in chaos because of war and makes production and distribution problematic so that it will be threatened with inflation, of course we deserve appreciation so we can prevent Ukraine from experiencing an economic recession.

If they Ukrainian are only allowed to purchase Bitcoin only with foreign currencies amid martial law then it means there will be more open channel to access the foreign exchange market with more ease. Ukrainian government are just been careful not to put total control in the hands of its citizens and because of the Ukraine Hryvnia inflation to avoid further threat on the national reserve foreign currencies is the only alternative to purchasing crypto. If Hryvnia is used for purchasing crypto the will be likely more inflation in prices following the economic crises in Ukraine at the moment

Yes, by looking at the existing conditions I think it is the right step or decision to legalize cryptocurrency,
we don't know when the war will end so if the Ukrainian government doesn't do something it will only make things worse,
but what is clear is that we better see what will happen in the future

Since the war started between Russia and Ukraine there are much news about bitcoin in both countries, Russia is trying to use bitcoin to bypass the sanctions and on the other hand, Ukraine is using bitcoin because there are many donations coming to this country from anonymous people in other countries, this interest and depend forced the government to pay attention to it so because of the interest from people they made a rule to allow people to exchange bitcoins in some conditions however the cap of 3.3K is very small especially if you imagine how people are demanding bitcoin.

Ukraine people may lost their trust on their local currency so will try to convert their currency to other assets which includes bitcoin so their decision is to prevent the fall of value of their national currency by controlling the volume on certain investment. Good for the economy? Still people can purchases in other methods like p2p with no cap value at all so it isn't really going to be effective their government has to find the ways to strengthen their currency instead of making people to suffer.

Should we work by the assumption that USD now is their major standard reserve currency that determines their own hyrivnia or they are working partly in favour of US to help them at the cause of the war the more not minding the cost.


Why am much concern about this is that Ukraine has their own hyrivnia as currency not that USD is their standard major currency over there, same as we have many countries with their local currency and USD just just a standard most reserve currency for exchange.


Damage on which side please? USD or hyrivnia currency? are they saying bitcoin will only compound to the falling of USD or hyrivnia? if used, because am not clear with the idea here?.


El-Savador was in debt before adopting bitcoin and they are going smoothly with an unregrettable decision. i think Ukraine has to wake up from it slumber and cease the opportunity in bitcoin for it quick recovery than waiting on USD to make a difference, US itself is undergoing inflation now and are looking for every possible means to get out.

The right policy if ukraine immediately legalizes bitcoin and cryptocurrencies, of course there will be many economic problems that can be overcome and the biggest problem is inflation due to war, besides that it is easy for donors to send money so that they can help ukraine in financial matters.

Its funny, Ukrainian first declared that they are open to accept the bitcoin lets say for donations but their own people can not buy stuff with the same currency? How they supposed to live if the cash might have burned in the fire from bombs or may be nothing left with them?
With crypto at least they might have chance to survive in the hard time and usually smartphone is the thing which most of them carries as SOS device in the war field which means they can easily use the crypto payments.
I am not sure how many of you liking the idea behind this but it seems little unfair.


Policy ? problems?

I think they have all the liberty right now to survive in anyway possible. They are God Dam in the middle of war.

I think it's a really good move. Such measures will help keep the capital in circulation and will not let the money on crypto wallets disappear. And in general, in Ukraine, people have long kept their savings in dollars, the hryvnia has fallen very much since 2012, almost by half.

In Ukraine, both the authorities and the population do not even consider the possibility that Russia will be able to occupy the entire territory of Ukraine. The people themselves will not allow this. Therefore, the people think only about victory, although they allow other options. Therefore, already now, under the shelling of Russian missiles, the sowing campaign is going on everywhere, the ruins of houses are being sorted out and damaged bridges and other infrastructure are being restored.
It must be admitted that Russia is deliberately destroying industry and civilian infrastructure, systematically destroying the economy of Ukraine. Based on this, the National Bank of Ukraine is forced to take measures that would support the economy and financial system. Unlike Russia, where the free circulation of the dollar and the euro is prohibited and an artificial exchange rate for these currencies has been created, Ukraine adheres to market relations, but with some restrictions. This is a forced and temporary measure.

Exactly my point then, their government is encouraging their citizens to purchase bitcoin only through foreign currency ( probably because bitcoin it is considered as the same type with precious metal in Ukraine ) because if the citizens keep on spending those native currency especially to purchase another currency / cryptocurrency then I'd imagine inflation would sky rocketed in there

Well its actually pretty vague considering that they are still in war

That’s also my thinking, their own fiat currency is already struggling even before the war begin and maybe they are encouraging their people to use other currency is to increase their Dollar reserve since once their people spend it, the money will go to them especially if their people used a bank platform just to have crypto. This can be a good move so they can help their own currency recover as well, and it is still good that Ukraine didn’t banned Crypto at all.

The National Bank of Ukraine had banned the cryto currency flow in their country. It may be the move for the Russia. Russia had do the transaction by the crytocurrency. So the war country was doing of opposite move to reduce the flow of money flow into the Russian government. The economic was the counter one for the opposite country involved in the war. This will reduce the economic flow into the Russia.

From what the bank announced, people can buy 100,000 hryvnia worth of cryptos per month from their foreign currency accounts (and that's around 3400 dollars). But, honestly, I can't really assess this move fully. I have a Ukrainian bank account, and before the war one could open a foreign currency virtual card online, convert the money from the foreign currency to local fiat and vice versa with no issues, all online within the online banking interface. But I haven't used that option for a while, so I don't know if it's still as easy. If it is, it's a great and simple workaround. If not, I'm sorry people can't pay for BTC in local fiat, but the move is clearly done to help stabilize our local fiat, which is of course hard to keep on a solid level because of the devastating war. It won't affect me anyway because I don't buy BTC with local fiat. On the contrary, I sell some for local fiat when I need to use it.

There is no assumption.
The USD is the standard reserve currency, no matter what hate the USA groups try to picture with their propaganda it's the $, far behind the Euro, and then the rest don't matter, even Russia held it's reserves in $ and more importantly in banks on US soil.
No assumption, that's how things work.



What's the concern?


Of course the hryvnia, how could an economy the size of Nebraska damage the US.


El Salvador is going further and further in debt.
They wore forced to take another $400 million in debt to cover government spending and their deficit to GDP for 2021 is close to 8%.
They are asking the FMI for billions in loans and their whole Bitcoin stash is worth just around 70 millions, actually they've lost money at the current price.
Remember how he bought the dip at ~$48,670? (https://twitter.com/nayibbukele/status/1467000621354135555)

So no, there is actually not a single thing pointing out right now that BTC has made some significant impact on Salvador economy.

I am a citizen of Ukraine, a resident of Kiev. Information as they say "first hand". On February 24, the beginning of the war, the dollar exchange rate was approximately UAH 28 per dollar, and in the first days it rose to UAH 35-38. But it turned out that it was a short-term panic race. Now the rate of the National Bank is UAH 29 (it is usually for commercial settlements, etc.), the cash market rate is UAH 32.
The situation is similar with the euro, the euro grew by about 10% compared to the pre-war period. Before the war, the exchange rate was 31-33 hryvnia/euro. Now the National Bank rate is UAH 31.6 for 1 euro, the rate for cash or for individuals is UAH 36 for 1 euro. There are no special problems with buying/selling currencies.

The reasons for locked transactions in the crypt/hryvnia pair are highly likely to be banned to prevent a negative impact on the local currency, manipulations on the foreign exchange market, criminal and illegal schemes, and uncontrolled withdrawal of assets from Ukraine (both internal and external "parasites"). As for me - a completely logical decision, for martial law.

I think this is a confusing policy, buying cryptocurrencies with foreign money for fear of the local currency dropping, if in safe conditions of course this will be easy, but when there is a war of course it is a difficult thing for citizens to buy with foreign money, it should be when receiving crypto is then automatically allowed to buy or sell with the local currency.

When receiving crypto, the Ukraine government is better to manage regulations that provide convenience to its citizens to receive and buy bitcoin, the first thing to make is to make a team that can provide the most obvious information and provide legalization of exchanges so that Ukraine residents get ease instead of prohibiting residents from buying with local currency.

The purpose of this is basically putting money back in to the nation. Everyone forgets this fact but the reality is that Ukraine is not just in war and loses money because of that, it also has people who flee the country and taking their valuables with them as well. This could be money, this could be gold, this could be anything. Which means that money is leaving the nation each time someone runs away with it.

So, if crypto is allowed and legal and even supported, then we would guess that people would be bringing money back in to the nation in form of digital currency, because crypto can't be bombed, and that would certainly help the nation in the long run as well.

We need to understand that they are in crisis right now, and the government wants to contain their funds as much as possible. This action may change once they are out of the war and they are starting to re-build their economy. However, for now, they will be looking for options on how to keep those funds within their jurisdiction and not use their local fiat outside. I strong believe that things will change once this war is over.

I think that is a means that the government want to hold the value of their money and not to allow it to depreciate because countries that go to war have that kind of effect that the currency will fall down but maybe that is the policy to protect their economy and currency at this time of war. It will be hard times and discomfort for Ukrainians but it will not be a permanent position of the government.
Russia rubie also have that challenge and Putin is making it force to make countries buying gas and oil paying in local currency.

In real sense it actually seems contradictory that a government that  recently accent to a policy that supports cryptocurrency trading in their country is restricting the use of the nation's currency in the purchase of cryptocurrency.

In as much as I feel the Ukrainian government is trying to protect the value of it's currency and at same time minimizing the rate of inflation that might be on due to the war. I wonder how majority of the citizens that don't have access or possession of foreign currency could benefit from this restrictions.

Cause it only place a few persons at advantage against majority. Be it as it may, people will always find their way out.

If I may ask, out of curiosity, is the Russian currency allowed to be used by the Ukrainian citizens in purchasing cryptocurrency since it's a foreign currency too?

Though I am not from that side but war affects a Country's economy and development. And I do not see any reason why Ukraine would leave their fiat currency and use a foreign Currency to buy and sell bitcoin. That is neo-colonialism and imperialism. I am sensing oppression. Ukraine has been oppressed to abandone their Fiat currency for a foreign Currency. Probably because of the war and the said Country promised to help them to fight and support them (Ukrain) Financially you otherwise. Advance Countries never help another country for Free. Although, there are negative aspect and positive aspect of war.

The negative aspect is that, war destroyed a Country's economy and development. Because when there is war in any country there would be no business activities that will be going on the country, at that stage, the Country's economy has been destroyed. So the best option for the host Country at that time is the use of bitcoin for the buying and selling of goods and services to sustain the fiat economy til the war is over. And the supportive Countries know all these things, so, they compelled Ukraine to abandone their Currency and foreign currency.

Then the position aspect of a war in any country is that. The technological advance Countries would used it to make more money buy selling their technology to them. And also even the Country's government make more money from the war because at that time, no spending in the war is counted or countable. Stealing of national fund is at it peak in a war period. All the expensives are for the war. So people make money from war.

But Ukrain abandoning it fiat currency for another currency is my concern here. Something is wrong at somewhere. There is treaty at somewhere.

Its during a time of war, hopefully its not their normal policy and its easily forgivable if its going to help the country to do so.    Exceptional measures become normal during time of war unfortunately, its part of what makes it so unprofitable and life is just a case of survival including government finance and budget ability.

This still falls to the law of demand and supply. Due to the invasion the economic values of the Ukrainian keeps depreciating and as a matter of fact the entire production and exportation scale for Ukrainian keeps depicting causing devaluation in their local currency. Investing in crypto with their local fiat means ditching hryvnia for crypto and will devaluate their local currency even further. Making it's value depreciate in the foreign exchange market and cause even higher inflation rate

This is understandable, where the Ukrainian currency must circulate to restore the country's economy, especially for crypto purchases which seem to have evaporated functionally for the country. With the current messy facilities and infrastructure and isolated economic activity, of course, Ukraine must be able to get out of this situation. and starting from the internal economic circulation in the country

When anyone use there own country's fiat money to purchase forgion products, there country buy back that amount while paying overtax. This is quite normal if things are not bad as they are currently in Ukraine.
Also to decrease any type of internal conspiracy they are controlling situation as much as they can and that's a very good initiative in my opinion.

It's going to bring some stability to Ukraine's national currency, and  this stability is very needed during war, especially the hot phase of war. Nearly every country in the world would take such measures if they were getting invaded and their economy was getting severely damaged.

But this artificial support for hryvnia only means that inflation will be high, and there will be a huge difference between black market and official exchange rate. At some point Ukraine will have to return to free market for their currency market, and it could come with a shock of sudden price drop.