Ukrainian bank suspends e-money transfers, bolstering crypto use case

A Ukrainian serviceman holds a rocket-propelled grenade launcher (RPG) at combat positions outside the city of Kharkiv, Ukraine, February 24, 2022.

Maxim Levin | Reuters

Ukraine’s central bank is cracking down on digital money transfers in one of the latest measures implemented under a nationwide declaration of martial law.

The National Bank of Ukraine ordered issuers of e-money (e-money) to suspend the issuance of e-money and the replenishment of e-wallets with e-money. The written order also stated that the distribution of electronic money was temporarily prohibited.

The reference to e-money likely refers to fiat currencies held in digital accounts through platforms like Venmo or PayPal.

It is one of many new rules put in place by the country’s central bank as Russian forces besiege Ukraine.

The National Bank of Ukraine issued a statement on Thursday containing a series of resolutions, including an order suspending the foreign exchange market, limiting cash withdrawals and prohibiting the issuance of foreign currency from bank accounts of detail.

As Ukraine cracks down on money lanes and Moscow unleashes airstrikes and ground troops, some Ukrainians are turning to cryptocurrencies instead.

Kuna, a popular Ukrainian crypto exchange, shows that domestic buyers are paying a premium for Tether’s stablecoin USDT, which is pegged to the price of the US dollar.

“We don’t trust the government. We don’t trust the banking system. We don’t trust the local currency,” Kuna founder Michael Chobanian said in an interview with Coindesk. “The majority of people have nothing else to choose but crypto.”

Tether is the most popular stablecoin by market cap at nearly $80 billion, and unlike cryptocurrencies like bitcoin and ethereum — which have seen great volatility in recent weeks amid rising geopolitical tensions — tether , like other such stablecoins, is generally quite stable in value.

At the current exchange rate, however, the price of 1 USDT is around 32 Ukrainian hryvnia (the national currency), or $1.10, thanks to increased demand.

For months, Ukrainian leaders have been seeking to become the mecca of digital currencies.

Ukrainian President Volodymyr Zelenskyy signed a law in 2021 that paved the way for the country’s central bank to issue its own digital currency, and the president and parliament recently agreed on legislation to legalize and regulate cryptocurrency. .

During an official state visit to the United States in August 2021, Zelenskyy spoke of Ukraine’s “innovative legal market for virtual assets” as a selling point for investment, and Minister of Digital Transformation Mykhailo Fedorov said the country is modernizing its payments market so that its national bank will be able to issue digital currency.

Prior to the Russian attack, Ukraine planned to open up the cryptocurrency market to businesses and investors, according to the Kyiv Post. Senior state officials have also touted their credibility with Silicon Valley investors and venture capital funds, but the Russian invasion has distracted from those efforts.

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