Adding crypto to Ukraine’s reserves is not a good idea, according to the country’s financial authorities.
Such a move warned regulators that it could undermine integration with the EU and conflicts with the IMF requirements.
NBU returns to the Crypto Reserve initiative
The National Bank of Ukraine (NBU) does not support the proposal to include virtual assets (VAS) in the country’s foreign currency reserves.
While most cryptocurrencies remain high-risk assets, security is a central principle for managing international reserves, high-ranking central bank executives will explain and elaborate in an interview with Interfax Ukraine.
“A sharp shaking of the value of virtual assets will have a negative impact on the overall size of the reserve.”
Officials continued to list several reasons why NBU is less enthusiastic about the idea. This includes the lack of a unified global understanding of the nature of VAS and the lack of uniform regulatory laws governing transactions and classifications.
His comments come after a group of Ukrainian lawmakers announced in May that it was working on a bill that would allow the NBU to add crypto to its gold and foreign exchange reserves. The bill was introduced in June to Verkhovna Rada of the Ukrainian Parliament.
However, Nikolaichuk pointed out that Kiev’s central bank had not been discussed by legislative sponsors.
Crypto Reserve is said to prevent Ukraine from joining the EU
An NBU official further said adding crypto assets to Ukraine’s reserves could undermine the country’s integration with the European Union. He told the news agency:
“The European Central Bank has a very clear position. We believe that it is unacceptable to include crypto assets in the reserves of central banks of EU countries. The reserves must be liquid, safe and protected.
Serhiy Nikolaychuk was clearly reflecting the statement by ECB President Christine Lagarde. He said, “I am confident that cryptocurrencies like Bitcoin will not be included in the (ECB) Central Bank reserves.”
Lagarde made his remarks after having described him as a “good conversation” with Czech National Bank (CNB) governor Alesi Mischl earlier this year. He previously proposed to study the idea of diversifying Czech Republic reserves through crypto investment.
Missir, who later won the prestigious central bank “Governor of the Year” award, admitted that Crypto Holdings is worth “zero or huge amounts” because of its price volatility.
Generally, European political and financial leaders were unable to accept one of the initiatives that helped bring President Donald Trump back to Washington’s administration.
According to Nikolaychuk, the proposed legislative changes to allow NBU to protect Crypto also violate the requirements of a technical memorandum based on the Ukrainian Extended Fund Facility (EFF) with the International Monetary Fund (IMF).
In August, Danylo Hetmantsev, chairman of the Parliamentary Committee on Finance, Taxation and Customs Policy, told the UKRIANIAN NEWS website that RADA has no plans to adopt the Crypto-preparation Bill. The lawmaker was quoted as saying in an interview.
“We spoke about this with the head of the National Bank, but we didn’t support such a measure given the high volatility of the crypto assets.”
Rather, the provisions of the bill do not require central banks to have the authority to acquire cryptocurrency in Ukrainian reserves.
The former Soviet Republic, which was the target of a full-scale invasion by neighbouring Russia in 2022, has seen a surge in crypto use since the NBU restricted financial transactions to prevent capital flights during the war.
A recent report by a major UK think tank shows that the country has yet to comprehensively regulate its virtual assets market, but has lost billions of dollars as a result of crypto-related crimes.
