The National Bank of Ukraine has issued a warning to the country’s regional banks, global financial institutions and its executives regarding the financial risks involved in the use of digital currencies like bitcoin.
The announcement of the Ukraine National Bank follows the organization’s investigation of the development and the use of emerging financial and payment systems. As a joint initiative, Central Banks of the EU countries and the National Bank of Ukraine warned all banks, payment organizations and executives to fully understand the necessary risks and potential damage when using digital currencies.
The National Bank is especially worried about the purely decentralized nature of bitcoin and that the users have to be liable for the risks and losses associated with the use of bitcoin in transacting payments and assets on the blockchain network.
Citizens and residents of Ukraine were advised to use regulated bitcoin exchanges and wallet service platforms for “customer protection” and “consumer rights.”
However, Kuna Bitcoin Agency of Ukraine told Cointelegraph that the National Bank issued a warning to the country’s banks due to “consistent requests” from the banking community.
“We have discussed this with the National Bank a lot. As clearly stated in the article the reason for publication was because of consistent requests from the banking community. There are no clear rules of the game when it comes to bitcoin and bank,” explained an agency spokesman.
“It's a problem not only of Ukraine but the world in general. Bitcoin companies know how difficult it is to open a bank account in Europe or USA. This is exactly what NBU has stated.”
“But there is a positive note. We are working hard to be pioneers in this field. The bitcoin revolution will happen not in the USA or Europe, where you have decent banking and free flow of capital. It will happen in the countries like Ukraine. We have no other choice, it's a matter of our survival. And surprisingly to us our best ally is NBU.”
Covert Investigations on Bitcoin Transactions
In March 2015, the Ukrainian authorities launched covert operations to investigate if bitcoin is used to fund “separatist campaigns.” Over the past few months, bitcoin has been subject to multiple investigations and operations on the part of the Ukrainian authorities, which has led to the closure of local bitcoin startups and exchanges.
“Another aspect of the joint work of the SBU and the ministry of Internal Affairs is to block accounts, cards, and a new variety of payment instruments, like Bitcoin and so on, commonly used as a financing method by the separatists,” announced Valentyn Nalyvaychenko, Chairman of the Security Service of Ukraine.
Ukraine National Bank Participates in Bitcoin Conference Kiev
Disregarding the indecisiveness of both the Ukrainian authorities and the Central Bank, on September 24, Director of the Payment Systems Department Nataliia Lapko and Director of the Retail Payments Department Serhii Shatskyi spoke at the second International exhibition and conference Bitcoin Conference Kiev on behalf of the Ukraine National Bank.
“The National Bank of Ukraine keeps a close eye on the launch of innovative products in the payments market and policies pursued by the central banks and public institutions of other countries to adopt the rules and regulations governing the use of cryptocurrencies in the European and global context,” said Lapko.
Despite the National Bank’s skepticism towards bitcoin, the organization is interested in its underlying technology, the blockchain. Shatskyi of the National Bank stated that cryptocurrency represents the best chance of turning the idea of a cashless economy into reality in Ukraine.
“Today, we have heard a lot of interesting information about the Bitcoin operation, and the advantages of using cryptocurrencies. The regulator welcomes all the initiatives that contribute to the development of cashless payments in Ukraine and is open for discussions of all new developments in this area,” Shatskyi added.