Is Ukrainian National Bank Testing Opposition to Financial Regulations?

Or are they going to ban primes?!

A official of Ukrainian National Bank (NBU) recently reported on Facebook that the digital currency Bitcoin (BTC) cannot be used for payments in Ukraine – ‘in order to protect consumer rights’. The official also points out that BTC allows ‘money laundering practices or financing terrorism’.  (ukrinform, zerohedge). There is some confusion about the meaning of this statement.

The Ukrainian currency (UAH) is devaluating due to the economic and political crisis. International money transfers are highly regulated in Ukraine in order to control and to prevent the outflow of capital. For instance:

‘Paypal does not allow incoming payment in Ukraine. You can pay with it, but not receive. Any big incoming payment in foreign currency will go through financial monitoring at the bank. They will freeze the transaction until you will provide a contract for work you have done to receive those funds. In case it’s your foreign account you need to have National Bank approval to have any account abroad.’ (eugene7, r/UkrainianConflict)

‘Technically it is possible to block [internet] data transfer of (not encrypted) Bitcoin transactions, for instance via DPI (Deep Packet Inspection)’, @ChristianMaeder explains. ‘Due to various possibilities of encrypting data transfers, the usage of Bitcoin cannot be prevented in practice, maybe the NSA could. In this respect banning Bitcoin is like banning primes’, the Swiss expert tells armedpolitics.

Blocking BTC on internet ‘is, however, easily bypassed by using encryption of traffic, or by using non-internet gateways to get transactions into the bitcoin network (like telephone or HAM radio)’ , a reddit user familiar with the matter specifies. (introshine, r/bitcoin)

It is not clear yet if or how the announced policy of NBU will be implemented in practice, what effect it will have on the 4900 payment terminals in Ukraine where BTCs are sold, how this will affect the estimated 236’000 BTC users in Ukraine.

‘Basically they [NBU] said: Government doesn’t give a damn if you lose all your money using Bitcoins. And you should not use anything other than UAH for your business records and official prices and tax records.’ (wowsignal, r/bitcoin)

Since a IMF delegation arrived for a two week visit today, the facebook post of a NBU official could be a test balloon. The reactions of those using BTC as ‘offshore banking of the poor man’ might give an indication of how much the Ukrainian upper middle class is generally opposed to further financial regulations.

Readings: reddit r/UkrainianConflict, r/bitcoin, InsideBitcoins, KyivPost, Bitcoin Conference Kiev