The central bank of Ukraine has adjusted the fixed exchange rate of the national currency in U.S. dollars and introduced stricter limits on hryvnia transactions for citizens. The measures are likely to turn more Ukrainians to cryptocurrencies, according to a representative of the local crypto sector.
The National Bank of Ukraine (NBU) has introduced new rules in response to the changing fundamentals of the country’s economy during an ongoing military conflict with Russia. The monetary authority devalued the Ukrainian hryvnia against the strong U.S. dollars by 25% on Thursday and set new limits on banking operations with the national fiat.
According to the updated regulations for private individuals, enforced on July 21, banks can sell non-cash foreign currency to their customers only if the amounts are deposited for a period of at least three months, without an option to terminate the contract.
Weekly withdrawal limits stand at 12,500 Hryvnia ($340), and the limit on p2p transfer from cards has been reduced from 100,000 to 30,000. At the same time, there is also a limit on the cross-border settlement at 100,000 Hryvnia or $2720. The governor of the National Bank of Ukraine, Kirill Shevchenko, said that the restrictions are temporary in nature. As I said above, these restrictions are in place so that Ukraine’s economy survives the current impact of the war.
New fiat laws in Ukraine and their implications
Right now, the restrictions could push Ukrainian citizens to choose crypto over fiat. These will help them bypass the restrictions introduced by the authorities. The crypto industry there also thinks it will be beneficial for them. However, do note that these laws are temporary. Right now, there is a weekly limit on withdrawals due to the war. But this will not last forever, and nor will the laws.
for citizens, this could be a problem as they cannot withdraw their own money. So, the interest in cryptocurrency has been increasing. Since the limits are so less, crypto could be used for cross-border payments. It could also become the medium for transactions for volunteers.
Due to the Russia-Ukraine war, the country’s banking infrastructure has been restricted, and so many limits are being put on transactions. Citizens cannot spend or withdraw their own money even if it is in their bank. Crypto solves this as no one can control your funds. If you have a hardware wallet, you will have complete control over it. However, the case is different if you store your coins on a centralized platform.
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