Ukrainians Turn To Crypto As Central Bank Halts Digital Money Transfers After Russian Invasion

Most Ukrainians are turning to cryptocurrencies for their day-to-today transactions after the National Bank of Ukraine (NBU) halted digital money transfer on Thursday.

Ukraine tightened its border controls as Russia sent warplanes, tanks, and soldiers in multi-pronged and massive attacks on Thursday. The country's central bank quickly initiated measures to mitigate the economic impact of the war. In addition, the NUB halted the foreign exchange market, limited cash withdrawals, and prohibited the issue of foreign currency from ordinary bank accounts.

Amid these tight regulations around currency, Ukrainians have started relying on cryptocurrencies.

Domestic consumers are paying a premium for Tether's USDT stablecoin, which is pegged to the US dollar price, as per the Kuna crypto exchange data.

With a market worth of about $80 billion, Tether is the most popular stablecoin, unlike cryptocurrencies like Bitcoin and Ethereum, which have seen a lot of volatility in recent weeks due to rising geopolitical tensions. Tether, like other stablecoins, is relatively stable in value.

Michael Chobanian, the founder of Kuna cryptocurrency exchange, told Cointelegraph, "We don't trust the government, and we don't trust the banking system, and we don't trust the local currency." He further added, "The majority of people have nothing else to choose apart from crypto."

Due to growing demand, the price of 1 USDT is now around 32.74 Ukrainian hryvnia (the national currency), or $1.10.

Recently, the country passed a law regulating cryptocurrencies and make their use legal. President Volodymyr Zelenskyy approved a law in 2021 allowing the central bank to issue digital currency.

Ukraine has received almost a million dollars worth of crypto in donations from worldwide to support itself in the face of the Russian invasion. It received over $570,000 worth of crypto last year, as reported by Elliptic. The nation has received almost $400,000 worth of crypto on Wednesday, one day before the Russian invasion.