Ukraine’s P2P Transaction Limits Threaten Crypto Market, Say Experts

Ukraine’s National Bank aims to finalise a draft decision on limiting the number of P2P transactions for individuals by the end of the week. This was stated by the head of the regulator, Andriy Pyshny, in an interview with Ekonomichna Pravda.

The document will introduce limits on card-to-card transfers between individuals. It is expected that this will help combat “drop” schemes.

“We discussed the issue of ‘drops’ not only as a threat to the state budget but also as a danger to citizens. By giving your data, card, or account to someone on the side, you bear responsibility for everything done with that account,” Pyshny emphasised.

He added that the tax service may impose additional taxes on transactions conducted through citizens’ accounts.

Deputy Chairman of the NBU, Dmytro Oleynik, confirmed previously discussed limits of 100,000 hryvnias per month for outgoing payments. This amount will not include transfers to volunteers.

The restrictions will take effect a month after the regulator publicly announces them.

Allbridge.io co-founder Andriy Velyky believes that the proposed measures will harm the cryptocurrency market, as any regulation does. In a comment to ForkLog, he recalled that Ukraine previously had numerous entry and exit opportunities. This stimulated the community and helped the population amid the collapse of the traditional banking system.

“Now they are trying to tighten the screws as much as possible, but this will not return money to traditional finance. Rather, people will become more inventive in how to withdraw it,” he added.

Lawyer Dmytro Nikolaevsky stressed that the NBU’s decision is “not against cryptocurrency per se, but against any tax evasion schemes.” He also agreed that for the industry, “this is more bad than good, as are any restrictions.”

Founder of the cryptocurrency exchange Kuna, Mykhailo Chobanyan, stated that over eight years, he personally built a transparent crypto market in Ukraine with a gateway to the hryvnia economy. However, it is now dead, and the government is “finishing off its remnants.”

“In an attempt to survive, the fragments of this market have moved to cash and ‘drop’ cards. After the introduction of new restrictions, there will be more cash, more economic repression for ordinary citizens and small businesses, the final collapse of the hryvnia economy, and, as a result, the loss of the country’s sovereignty. The financial system is the lifeblood of the economy,” the businessman noted.

In his view, after the destruction of crypto-fiat gateways, a new, fully decentralised system will emerge in their place.

“So I fully support the actions of the NBU and the government. It’s hard to imagine better evangelists for crypto. First, they ignore you, then they laugh at you, then they fight you. And then you win,” Chobanyan concluded.

In March 2022, PrivatBank temporarily banned its clients from depositing hryvnias on cryptocurrency exchanges, although this did not affect the market of Ukrainian trading platforms. The restriction is linked to the National Bank’s decision and is in effect during martial law.

Moreover, from the end of April that year, the NBU limited cryptocurrency purchase transactions to 100,000 hryvnias per person per month to reduce capital outflow from the country.

In March 2023, foreign cryptocurrency exchanges reported a temporary suspension of operations through hryvnia bank cards due to intensified efforts to combat illegal gambling.