The central bank of Ukraine has supported the development of the cryptocurrency industry after the Verkhovna Rada passed a major cryptocurrency law in early September.
The National Bank of Ukraine (NBU) has issued an official statement on the basic principles of monetary policy for the coming year, with a focus on cryptocurrency regulation on September 13.
The central bank stressed that the NBU recognizes the importance of technological innovation related to virtual assets and sees “many promising opportunities,” such as improved access to financial services and increased competition in the payments market.
Cryptocurrencies such as Bitcoin (BTC) have not had a significant impact on monetary policy and financial stability in Ukraine due to their current “relatively limited” level of adoption and high price volatility, according to the NBU.
However, since the bank is confident that wider adoption will ultimately make cryptocurrencies less volatile, the NBU will take certain measures to ensure financial stability. Thus, the NBU will “take appropriate care” to monitor the risk of rapid adoption of cryptocurrency, in particular by focusing on private stack coins, a type of cryptocurrency associated with an underlying asset such as fiat or precious metal.
According to the bank, cryptocurrencies ultimately pose a potential risk of substitution of the national currency and “the appearance of parallel money circulation” outside the control of the NBU. Other risks include foreign capital outflows, fears of money laundering, and “traditional bank replacements” in general.
The agency said that to minimize these risks, the NBU will work to ensure that the Ukrainian hryvnia is the only legal currency in Ukraine, adding that the central bank will remain committed to promoting cryptocurrencies, noting:
“The National Bank will make efforts to create a system that provides transparent and understandable government regulation, which will contribute to the development of fair and efficient trading in virtual assets.”
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The NBU also indicated that it will continue to study international experience in the development of a central bank digital currency (CBDC). As previously reported, Ukrainian President Volodymyr Zelenskyy signed a law that officially allowed the NBU to issue digital currency to the central bank in July 2021.
The news comes after the Verkhovna Rada passed the Virtual Assets Law on September 8, which gives legal recognition to cryptocurrencies such as Bitcoin. Although Bitcoin is not recognized as legal tender, the law still allows cryptocurrency payments by converting cryptoassets into fiat ones, according to some government officials.