Recognizing the potential offered by the cryptocurrency, the National Bank of Ukraine is now reviewing the possibility of implementing the technology behind bitcoin into the country's crumbling financial system.
Ultimately, this could mean that Ukraine might be legalizing bitcoin. In August, the National Bank and the Ukraine Bitcoin Foundation met in order to gain a more in-depth understanding of how bitcoin technology works and how implementing it could be approached in a regulatory manner.
At the moment, the blockchain appears to be of the most interest to the country. While some countries have remained hesitant regarding bitcoin technology, Ukraine has recognized that the technology does not appear to be going anywhere and could very well be the future of currency as we know it. Earlier in the year, a draft for a Ukraine BitLicense was introduced during a session with the NBU. Overall, the reception has been relatively positive.
Ukrainian citizens welcoming bitcoin with open arms
Around the country, residents of the Ukraine have also proven to be welcoming of the cryptocurrency concept. Nationally, there are now almost 5,000 payments terminals that make it possible to purchase bitcoin for cash. The terminal network is operated by the National Credit Bank and allows customers to purchase vouchers for the cryptocurrency from BTCU, a relatively new company.
After a customer has deposited cash into one of the terminals, he or she receives a voucher that contains an activation code either via a text message or on a printed receipt. The customer may then go to a website to enter the code and claim their bitcoin. By using the terminals, customers can also handle other payments, including purchasing mobile phone credits and paying utility bills.
The terminals have become so popular in the Ukraine that the country has now earned the reputation as being the Bitcoin ATM of the world. In the capital of Kiev, the terminals are have become a particularly common sight and is even now known as a bitcoin hub. In total, there are now more than 15,000 machines spread out over some 4,000 locations in the Ukraine.
With more people in the Ukraine demanding less expensive and more convenient payment options, particularly for international transactions, bitcoin has become increasingly popular. This is particularly true among young Ukrainians, who have developed a preference for purchasing items online.
Earlier in the year, the Ukrainian government took the step of issuing legal guidance to assist bitcoin businesses. 1 As part of that guidance, firms were instructed that they needed to register with the Ukrainian government in order to operate legally.
The legal status of bitcoin in the Ukraine
At the moment, the legal status for bitcoin remains somewhat murky in the Ukraine. There is currently no law in the country that would prohibit the use of the cryptocurrency.
Despite the apparent willingness of the Ukrainian government to welcome bitcoin, it would seem that the government is not yet completely willing to endorse the digital currency. Most recently, the National Bank of Ukraine issued a warning to financial institutions, including regional banks, regarding the cryptocurrency. According to the government, bitcoin remains risky and should be considered a speculative asset. The government notice appears to serve as a reminder to banks as well as consumers that despite the many benefits offered by bitcoin, there are still potential risks.
Precisely how long it could take before bitcoin becomes legalized in the Ukraine remains to be seen, but the demand is certainly there. If that demand should continue at its current rate, even greater widespread adoption could occur throughout the Ukraine.
1) National Bank of Ukraine. National Bank participated in Bitcoin Conference Kiev.