Ukraine's National Bank Suspends Withdrawal And Deposit Of Fiat To Crypto

JAKARTA – The Ukrainian financial authority, the National Bank of Ukraine (NBU), has reportedly suspended the withdrawal and deposit of hyrvina fiat money from and to crypto. The move was regretted by the two leading crypto exchanges operating in Ukraine, Binance and Kuna.

Kuna itself is one of the leading exchangers in Ukraine. As a result of these restrictions, both trading platforms have advised their traders to use the peer-to-peer (P2P) market. As additional information, peer-to-peer (P2P) markets in crypto trading refer to trading platforms that allow buyers and sellers to interact directly without going through intermediaries such as crypto exchanges or exchanges. In a P2P marketplace, buyers and sellers can meet and trade face-to-face, usually via an online platform or app.

“Currently, fiat channels, i.e. input, and withdrawal via bank cards and other payment services, are temporarily suspended among cryptocurrency exchanges across Ukraine,” the trading platform said in a Telegram post on Thursday, quoted by Bits.media.

On Friday, March 3, Kuna founder Michael Chobanian suggested that the difficulties with non-cash hryvnia transactions may be related to efforts by Ukrainian authorities to fight money laundering and tax evasion via online gambling sites. He quoted a recent statement from a member of the Ukrainian parliament stating that this kind of money circulation amounts to 54 billion hryvnias or nearly 1.5 billion US dollars (about IDR 22.9 trillion) per year.

"Regarding hryvnia cards and input/output to exchanges. Yes, it doesn't work... In short, we are looking for a way out of this situation, under threat of termination of the entire Ukrainian UAH crypto/card market," said Kuna founder Michael Chobanian, on his Telegram channel.

Chobanian believes the restrictions are bringing reputational damage to Ukraine, which has been leading the way in crypto adoption in the region and beyond. According to him, this situation will also affect the activities of small and medium-sized companies as well as cryptocurrency donations, as reported by Bitcoin.com News.

This is very concerning, especially since recent reports from blockchain intelligence firms Elliptic and Chainalysis reveal that Ukraine has raised over 212 million US dollars (IDR 3.2 trillion) in crypto for defense and humanitarian efforts since the start of the Russian invasion in late February 2022, 70 million US dollars (IDR 1 trillion) of which have been received through addresses provided by the government.

At the end of April, the National Bank of Ukraine imposed a monthly transaction limit on cryptocurrency purchases of 100,000 hryvnia per person. The monetary authorities have yet to comment on the consequences of the restrictions on the country's crypto market.

However, it is reasonable to worry that these restrictions will affect Ukraine's ability to harness the huge potential of blockchain technology and cryptocurrencies, as well as affect the activities of small and medium enterprises and donations of cryptocurrencies for defense and humanitarian efforts.