The National Bank of Ukraine recognizes the benefits of supporting crypto innovations, but also fears that cryptocurrencies could gain ground against the national fiat. In announcing its monetary policy guidelines for the near future, the regulator announced that it would defend the hryvnia as the only legal tender in the country.
Bank of Ukraine will not allow crypto to replace fiat money
Under the current government in Kiev, Ukraine has taken steps to regulate its expanding crypto space. Earlier this month, the Ukrainian Parliament passed a Law “On Virtual Assets” legalizing crypto-related activities and is now working on tax changes related to cryptocurrency transactions. President Volodymyr Zelensky described the crypto market as the “development vector” of the country’s digital economy.
Against this background, the National Bank of Ukraine (NBU) has recognized that innovations related to virtual assets or cryptocurrencies can improve access to financial services for Ukrainians while increasing competition between market participants and also bringing investments to the Eastern European country. The regulator supports the growth of the emerging digital currency industry.
At the same time, the central bank sees certain risks in cryptocurrencies, as its recently adopted “Principles of Monetary Policy for 2022 and the Medium-Term Perspective” revealed. According to the document cited by Forklog, the proliferation of decentralized money can encourage the outflow of money from bank deposits into digital assets, jeopardize financial stability and increase the circumvention of financial surveillance.
Above all, the NBU fears that cryptocurrency can possibly replace the national fiat money, the Ukrainian hryvnia, which will lead to the “creation of a parallel money circulation”. In order to limit these risks, the agency wants to prevent any restrictions on the use of the hryvnia as the only legal tender in Ukraine and is also preparing to issue a digital version of the national currency.
The National Bank of Ukraine notes that cryptocurrencies are not currently having a material impact on the government’s monetary policy and financial stability, but acknowledges that this is likely to change in the future. As technology advances and market expansion, and investor awareness and interest, “the diffusion of virtual assets could increase significantly and their price volatility could decrease,” the central bank concludes.
In an interview in August, the Deputy Minister for Digital Transformation Oleksandr Bornyakov promised that Ukrainians will be able to keep, trade and spend cryptocurrencies. The government official pointed out that while the new legislation does not allow their use as a means of payment, it will be legal to pay with crypto through instant conversion to the hryvnia. Bornyakov added that he expects a whole new market for intermediary services that will allow digital coins to be stored, exchanged and used for payments.
Do you think that the National Bank of Ukraine will accept cryptocurrencies as legal tender in the future? Let us know in the comments section below.
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source https://www.bisayanews.com/2021/09/23/central-bank-of-ukraine-supports-crypto-industry-fears-cryptocurrency-regulation-bitcoin-news/
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