Following the adoption of a key crypto law by the Ukrainian parliament in early September, the central bank of Ukraine has moved to promote the development of the cryptocurrency business.
On September 13, the National Bank of Ukraine (NBU) made an official statement on the core principles of monetary policy for the future year, with a focus on cryptocurrency regulation.
The NBU recognizes the importance of technological advancements related to virtual assets and sees “many attractive opportunities,” such as boosting access to financial services and strengthening competition in the payments industry, according to the central bank.
Due to its current “very restricted” adoption level and considerable price volatility, cryptocurrencies such as Bitcoin (BTC) have had little impact on Ukrainian monetary policy and financial stability, according to the NBU.
However, because the bank is certain that increased usage would make cryptocurrencies less volatile in the long run, the NBU will take certain steps to safeguard financial stability.
As a result, the NBU would “pay close attention” to the dangers associated with cryptocurrency’s rapid growth, with a particular focus on private stablecoins, a type of cryptocurrency tied to an underlying commodity such as a fiat currency or a precious metal.
According to the bank, cryptocurrencies could eventually replace the national currency, resulting in the “development of parallel money circulation” outside of the NBU’s authority.
Other dangers include outflows of foreign capital, money laundering issues, and the “disruption of traditional banking” as a whole.
The NBU will seek to ensure that the Ukrainian hryvnia is the only legal tender in Ukraine to reduce these dangers, the authority stated, adding that the central bank will continue to promote cryptocurrency at the same time.
“The National Bank will make efforts to build a system providing transparent and understandable state regulation that will promote the development of fair and efficient circulation of virtual assets.”
In addition, the NBU stated that it would continue to research the international experience of building a central bank digital currency (CBDC).
According to recent reports, Ukrainian President Volodymyr Zelenskyy signed a law allowing the NBU to issue a CBDC in July 2021.
The development comes after Ukraine’s Verkhovna Rada approved a draft bill titled “On Virtual Assets” on September 8, extending legal status to cryptocurrencies such as Bitcoin.
Despite the fact that Bitcoin is not recognized as legal cash, some government officials claim that the legislation nevertheless allows crypto-based payments by converting crypto assets into fiat.
