Ukraine bans bitcoin purchases made with national currency

The Ukrainian central bank is now prohibiting citizens from purchasing bitcoin with the local fiat currency, the hryvnia (UAH), as it attempts to curb capital outflows under martial law.

Under the new rules, the National Bank of Ukraine (NBU) is also limiting the amount of cryptocurrency people can buy with foreign currencies – an equivalent of UAH 100,000 (about $3,390) per month.

Since the war began, the central bank found that $1.7 billion was transferred out of Ukrainian banks in March and $900 million in early April, prompting the new restrictions.

The restrictions are not exclusive to Bitcoin. The new directives imposed by the NBU cover a slew of asset purchases and “quasi cash” transactions, including replenishment of electronic wallets, brokerage or foreign exchange (FX) accounts and payment of traveler’s checks.

The central bank said such measures are necessary to prevent capital outflows and to reduce pressure on Ukraine’s foreign-currency reserves. The NBU also labeled bitcoin purchases as “quasi cash transactions.”

The NBU isn’t the first institution in Ukraine to move to ban bitcoin purchases. PirvatBank, the country’s premier commercial bank in the country, stopped its customers from purchasing bitcoin with hyrvnia in March.

The temporary ban of cryptocurrency in Ukraine differs significantly from the country’s initial warm embrace.

Ukraine has raised millions through cryptocurrency donations that have supported its war effort, raking in nearly $67 million of a $200 million goal set in March.