Ukraine’s central banking authority, the National Bank of Ukraine (NBU), has expressed reservations about incorporating cryptocurrencies into the nation’s reserve assets, signaling no current intention to pursue such a strategy.
A high-ranking official at the NBU cautioned that such a decision could potentially impede Ukraine’s ongoing efforts to integrate with the European Union and might conflict with stipulations set by the International Monetary Fund (IMF).
NBU Hesitant About Crypto Reserve Idea
Serhiy Nikolaychuk, the First Deputy Governor of the National Bank of Ukraine, clarified that the NBU does not support the proposition to include virtual assets (VAs) within the country’s reserve holdings. He views the idea as premature.
Speaking in an interview with Interfax-Ukraine, Nikolaychuk emphasized that the volatile nature of most cryptocurrencies makes them unsuitable for reserve management, where security and stability are paramount.
“Substantial price fluctuations in virtual assets could destabilize the overall value of our reserves,” he stated.
The official further detailed the NBU’s concerns, pointing to the lack of a universally accepted definition of virtual assets and the absence of standardized global regulations for crypto transactions and categorization.
These remarks follow the recent announcement by a group of Ukrainian legislators who are drafting legislation to authorize the NBU to add cryptocurrencies to its reserves of gold and foreign currency. The proposed law was submitted to the Verkhovna Rada, the Ukrainian parliament, in June.
However, Nikolaychuk noted that the central bank in Kyiv was not consulted during the drafting process of this legislation.
Crypto Reserves Seen as Potential Obstacle to EU Accession
The NBU official also raised concerns that incorporating crypto assets into Ukraine’s reserves could jeopardize the country’s integration with the European Union. He explained to the news agency:
“The European Central Bank maintains a firm stance: they deem it unacceptable for EU member states’ central banks to hold crypto assets in their reserves. Reserves must be liquid, safe, and secure.”
Serhiy Nikolaychuk’s statements echo similar sentiments expressed by ECB President Christine Lagarde, who has stated her “confidence that cryptocurrencies like Bitcoin will not enter the reserves of any of the central banks of the [ECB’s] General Council.”
Lagarde’s comments followed a “good conversation” with Czech National Bank (CNB) Governor Aleš Michl earlier in the year. Michl had previously explored the possibility of diversifying the Czech Republic’s reserves with crypto investments.
Michl, later recognized with the “Governor of the Year” award, acknowledged the inherent price volatility of cryptocurrencies, noting they could eventually be “either zero or a huge amount.”
Generally, European political and financial leaders have been reluctant to adopt initiatives similar to those that boosted Donald Trump’s campaign in the U.S. – namely, a commitment to create a strategic Bitcoin reserve, which he implemented after his presidential victory.
Nikolaychuk also pointed out that allowing the NBU to hold crypto in reserve would contravene the Technical Memorandum established under Ukraine’s Extended Fund Facility (EFF) with the International Monetary Fund (IMF).
Danylo Hetmantsev, chairman of the parliamentary committee on finance, taxation, and customs policy, told Ukrainian News in August that the Rada has no plans to approve the crypto reserve bill. He stated in the interview:
“We have discussed this with the head of the National Bank and we do not support such measures, given the high volatility of crypto assets.”
The proposed legislation is permissive, not mandatory, granting the central bank the option, but not the obligation, to acquire cryptocurrencies for Ukraine’s reserves.
Since the start of the conflict with Russia in 2022, the former Soviet republic has experienced an increase in cryptocurrency adoption as the NBU imposed restrictions on financial transactions aimed at preventing capital flight.
However, a recent report by a prominent U.K. think tank indicates that Ukraine, which has yet to fully regulate its virtual asset market, is losing billions of dollars due to illicit activities involving cryptocurrencies.
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