Ukraine’s National Bank Warns of Risks to the Hryvnia From the Spread of Cryptocurrencies

The National Bank of Ukraine (NBU) believes that cryptocurrencies could potentially displace the hryvnia. This говорится in the NBU’s main principles of monetary and credit policy for 2022.

The regulator acknowledged that innovations related to virtual assets can improve access to financial services, increase competition, and facilitate attracting investments. Therefore, the NBU supports creating conditions for the development of the digital currency industry in Ukraine.

Nevertheless, the central bank sees risks in cryptocurrencies. Among them: substitution of the national currency and the emergence of a parallel monetary circulation, which threatens financial stability, evasion of financial-monitoring requirements, and the migration of part of bank deposits into digital assets.

To minimize these risks the NBU intends not to allow restricting the hryvnia’s use as the sole legal tender in Ukraine.

At present, cryptocurrencies do not exert a material influence on monetary policy and financial stability due to high volatility and limited penetration, the regulator noted.

“However, as technological progress, development and expansion of the virtual asset market, and the growing interest and awareness of individual and institutional investors, the prevalence of virtual assets may significantly increase, and their price volatility may decrease,” the NBU emphasised.

Earlier in September, the Verkhovna Rada of Ukraine adopted the law ‘On Virtual Assets’, regulating cryptocurrency operations within the country.

Detailed analysis of the document can be found in ForkLog’s exclusive.

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