Martial law is in full force in Ukraine as the National Bank of Ukraine banned crypto purchases with the country’s fiat currency, the hryvnia, on Friday, April 22, 2022.
The central bank is only allowing crypto purchases using foreign currency up to the value of 100,000 hryvnias, or $3,400 per month, as it seeks to “prevent unproductive outflow of capital in the country under martial law” and prevent depletion of foreign currency reserves. In a released statement, the national bank said, “The [National Bank of Ukraine] estimates that said changes will improve conditions on the foreign exchange market, which is a prerequisite for further easing the restrictions and relieving pressure on Ukraine’s international reserves.” Crypto purchases fall under the definition of “quasi cash transactions,” an area of transactions encompassing digital wallet replenishment, brokerage and forex accounts, and payments for traveler’s checks.
On Friday, the National Bank of Ukraine made the statement, joining commercial-banking institution PrivatBank, which stopped bitcoin purchases with the national currency last month. Since the start of the war, $1.7B flowed out of Ukraine’s banking institutions in March and $900M in April, catalyzing the bans.
Crypto has been critical to Ukraine’s survival
Ukraine’s Deputy Prime Minister and Minister of Digital Transformation Mykhailo Federov began soliciting support for the war relief effort in February, making public three crypto wallet addresses to receive crypto donations in Bitcoin, Ether, and Tether on Feb. 26, 2022. As aid funds continued to pour in ($63.8M, according to Elliptic), the Ukraine government legalized crypto, bringing it under the jurisdiction of the National Commission on Securities and Stock Market. The country now accepts fourteen different cryptocurrencies.
However, the central bank now wishes to prevent the national currency from losing its value in a similar fashion to the Russian ruble. Early April saw the World Bank estimate a 45 percent decrease in Ukrainian Gross Domestic Product.
When was martial law invoked?
Initially, martial law was invoked when Russian president Vladimir Putin announced a military operation in the Donbas region on Feb. 24, 2022. When martial law is in force, the military makes and enforces the law instead of civilly elected leaders. Should civilians defy martial law, they could appear in military tribunals and not the country’s traditional civilian-focused court system.
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