The government of Ukraine has decided to implement new restrictions on withdrawals and exchange of its fiat currency, the hryvnia (UAH). Could this encourage the adoption of cryptocurrencies within the country?
Ukraine’s government is implementing restrictions on the hryvnia
Announced late last week, the measures are aimed at stopping the bleeding and keeping the hryvnia’s price as best it can. The country’s central bank has devalued the UAH by 25% against the dollar, and withdrawals are now even more limited.
Ukrainians will only be able to withdraw 12,500 UAH (€334) per week, down from 50,000 (€1,336). In commercial banks, cash purchases will only be accessible if the amount is deposited for at least three months. Finally, bank cards issued by Ukrainian institutions are now subject to limits for international transfers.
The government has said that these measures are temporary, and that they serve to support the war effort. Ukraine wants to maintain its economy, which has suffered greatly from the conflict with Russia, at all costs. The hryvnia had already been gradually losing value before this devaluation.
Steps that are driving cryptocurrency adoption?
As Ukraine’s fiat currency has lost value, and locals are increasingly restricted in their money movements, could this be driving cryptocurrency adoption? Yes, according to some local players. Mikhail Chobanyan, the founder of the Kuna exchange, told Ukrainian media outlet Forklog:
“We expect an increase in turnover and use of cryptocurrencies. In Europe, 100,000 hryvnias is nothing at all.”
This assumption is supported by the example of other territories – for example, Latin American countries – where people compensate for the loss of value of their local currency by using cryptocurrencies.
Mikhail Chobanyan also believes that these restrictions on the UAH will tend to slow down humanitarian aid, which will also have to adapt. As a reminder, the government of Ukraine had very early in the conflict launched an appeal for donations in cryptocurrencies, collecting several tens of millions of dollars in a week.
