Under martial law, Ukraine limits withdrawals and suspends digital wallets

The National Bank of Ukraine imposed several temporary restrictions to avoid economic panic and collapse. The PFTS Stock Exchange also suspended trading on Thursday.

Why should we care?
By capping daily cash withdrawals to the equivalent of $3,339 and discontinuing digital money transactions, the Ukrainian government looks to avoid having the Russian invasion tank its economy. However, this move may inadvertently further legitimize and accelerate an exodus to blockchain-based forms of exchange. The central bank ordered “issuers of electronic money to suspend the issuance of electronic money, replenishment of electronic wallets with electronic money, [and] distribution of electronic money.” “Electronic money” presumably means digital fiat currencies rather than cryptocurrencies—tools like PayPal wallets or holdings in digital banks. Some experts think the Russian government may also look to cryptocurrencies as a way to evade sanctions. Andrew Jacobson of law firm Seward & Kissel said the Russian government “probably is thinking about using bitcoin or other cryptocurrencies to evade sanctions,” but that state actors are “probably concerned about those cryptocurrencies getting too much popularity within their own country, because that impacts their own control of their own monetary system, and therefore impacts their power.” Shifting balances of power could have significant effects on what kinds of financial technologies are adopted in the months to come—and by whom.