The Central Bank of Ukraine has finally decided to support the development of the cryptocurrency industry after the Ukrainian parliament passed a major crypto law in early September.
The National Bank of Ukraine (NBU) believes that cryptocurrencies can replace Ukrainian hryvnia. This is stated in the NBU’s Monetary Policy 2022 Key Principles.
The regulator recognizes that innovations related to Virtual Assets (VA) can improve access to financial services. Furthermore, increase competition and encourage investment. Therefore, the NBU supports the creation of conditions for the development of the digital currency industry in Ukraine.
However, the central bank sees losses in cryptocurrencies. Among them: the replacement of the national currency and the emergence of a parallel currency that threatens economic stability; Avoiding financial oversight requirements; Some of the bank deposits flow into digital assets.
As the bank is confident that further growth in adoption will eventually stabilize cryptocurrencies, the NBU will take some steps to ensure financial stability. Similarly, the NBU pays “appropriate attention” to monitor the risks of rapid adoption of cryptocurrencies, a type of cryptocurrency that is associated with a fundamental asset, such as fiat currency or precious metal, with a particular focus on specific fixed currencies.
To this the NBU said,
“However, technological advances, the development, and expansion of the virtual asset market, the increase in interest and awareness of individual and institutional investors, the increase in the surplus of virtual assets and the reduction of their price volatility”.
To mitigate these risks, the NBU confirms that the only legal tender in Ukraine is the Ukrainian hryvnia, although the Central Bank is still committed to promoting crypto.
On September 8, Verkhovna Rada of Ukraine passed a law “On Virtual Assets” regulating the activities of cryptocurrencies in the territory of the country and also giving them recognition at the same time.