Central Bank of Ukraine suspends e-money transfers, cryptocurrency becomes inevitable

The Central Bank of Ukraine is cracking down on digital money transfers in one of the latest measures related to the imposition of martial law across the country.

The National Bank of Ukraine (NBU) has ordered issuers to suspend issuing e-money and to replenish e-wallets with e-money. The written order also shows that the distribution of e-money is temporarily restricted.

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

This is one of many new regulations introduced by the country’s central bank amid Russian forces besieging Ukraine.

The National Bank of Ukraine on Thursday issued a statement with a number of resolutions, including orders to suspend the foreign exchange market, restrict cash withdrawals and ban foreign currency issuance from retail accounts.

With Ukraine blocking money transfers and Moscow launching ground-based airstrikes, some Ukrainians are turning to cryptocurrencies instead.

Kuna, a popular Ukrainian cryptocurrency exchange, shows that domestic buyers are paying a premium for Tether’s USDT stablecoin Bitcoin Magazine reported.

“We don’t trust the government. We don’t trust the banking system. We don’t trust the local currency,” said Michael Chobanian, founder of Kuna. “Most people have nothing to choose from other than cryptocurrencies.”

Tether is the most popular stablecoin after a market cap of nearly $80 billion and, unlike cryptocurrencies like Bitcoin and Ethereum, has experienced a lot of volatility in recent weeks amid geopolitical tensions.

For months, Ukrainian leaders have been trying to rebrand themselves as a mecca for digital currencies.

Ukrainian President Volodymyr Zelenskyy signed a law in 2021 paving the way for the country’s central bank to issue its own digital currency, and recently the president and parliament introduced legal tender provisions to legalize and regulate cryptocurrencies.

According to the Kyiv Post, before the Russian attack, Ukraine had a plan to open the cryptocurrency market to businesses and investors. Top state officials have also touted their crypto street loans to Silicon Valley investors and venture capital funds — but Russia’s invasion is a stumbling block to those efforts.

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