“Allowing Crypto As A Legal Tender Is A Red Line”: Ukraine Central Bank

Ukraine’s central bank has outlined the country’s approach to crypto legalization. Andriy Pyshnyy, the Governor of the National Bank of Ukraine (NBU), asserted that while digital assets will be recognized, they will not be allowed to serve as legal tender. This move underscores Ukraine’s cautious stance on crypto despite global countries becoming more open to digital assets.

Ukraine to Legalize Crypto, But with Caution

The National Bank of Ukraine (NBU) has set conditions for crypto legalization, emphasizing that digital assets will not be accepted as a means of payment. In an interview with RBC-Ukraine, Governor Andriy Pyshnyy emphasized that allowing crypto as a legal tender is a “red line” for the bank. He noted,

It is important for us that our ‘red lines’ are clearly observed. Virtual assets cannot be a means of payment, cannot in any way undermine the effectiveness of our monetary instruments.

Via crypto legalization, the central bank intends to strengthen the country’s financial system. As the country prioritizes financial stability and regulatory control, the NBU has decided to refrain from promoting crypto payments. It is noteworthy that the development comes following Vietnam’s decision to legalize Bitcoin and other cryptocurrencies.

Further, the governor asserted that crypto legalization must not compromise the central bank’s authority or undermine its regulatory control. He also cautioned that crypto assets must not be used to bypass currency controls during martial law. His statement read, “The legalization of virtual assets should also not undermine our effectiveness in ensuring financial monitoring; the legislation in this area should implement the norms of international FATF standards and relevant European regulations.”

Is Ukraine Bitcoin Reserve At Risk?

Notably, this move comes on the heels of Ukraine’s initiative to establish a strategic Bitcoin Reserve, aligning with similar progressive moves from other global powers. As CoinGape reported, the country was in discussions with the NBU to adopt a crypto reserve, following the lead of countries like the US and Pakistan.

According to MP Yaroslav Zhelezniak, the proposed bill would allow the central bank to include cryptocurrencies like Bitcoin in state reserves, but wouldn’t make it mandatory. The bank would retain full authority to determine the allocation of its reserves to crypto, including the amount and timing. Zhelezniak cited, “How, when and how much should be the decision of the regulator itself.”

With Ukraine’s decision to legalize cryptocurrencies, the Bitcoin Reserve plan gets a more stable foundation and regulatory clarity. The country’s cautious approach is not expected to hinder the Bitcoin reserve initiative, but may further bolster it, mitigating potential risks associated with BTC.