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E-money Operations Banned in Ukraine After Russian Invasion

  • Cash withdrawals by the Ukrainian issuer have been limited to 100 thousand hryvnias, equivalent to about $3,300 USD.
  • Ukrainians will only be able to carry out operations in their local currency as part of the measures adopted by the government to preserve the financial system.
  • The president of the Czech Republic has proposed disconnecting Russia from the international payment system while Russia’s leader of the opposition Garry Kasparov expresses that Ukraine should be supported militarily with “weapons, intel and cyber [facilities].”

Ukraine’s Central Bank issued a resolution as part of the government’s proclamation of Martial Law following attacks made by Russian troops by air, land and sea on Thursday 24th against several border towns. The resolution establishes the suspension of the foreign currency cash exchange market.

The measure, announced by local media in Kiev, also restricts the withdrawal of cash at ATMs in hryvnias, the local currency, which were limited to a maximum amount of UAH 100 thousand, which is equivalent to approximately 3,300 US dollars.

As part of the resolution made by the Ukrainian issuing body, it is clearly stated that all cash operations carried out using electronic money from foreign currency accounts are suspended as of Thursday, February 24th.

This includes banks issuing electronic money, which must suspend said operations, as well as the replenishment of electronic wallets with electronic money, and the distribution of digital money. However, non-cash payments will not be restricted.

Although the foreign exchange market has been interrupted for the duration of hostilities, the Central Bank statement clarifies that the sale of foreign currency to banks is allowed. In other words, users will be able to exchange dollars, euros and any other currencies for hryvnia in order to carry out commercial transactions.

The text of the resolution does not cover provisions for operations with cryptocurrencies and other digital assets.

On the Flipside

  • Last year, Ukraine legalized cryptocurrency mining and trading. Reports indicate that the activities of the separatist rebel groups in the border regions of Lugansk and Donbas could have been financed with cryptocurrencies.
"Appropriate actions are needed to ensure the reliable and stable functioning of the country's financial system and to maximize the activities of the Armed Forces of Ukraine, as well as the proper functioning of critical infrastructure," the statement said.

“Kick Russia out of the SWIFT System”

After the massive attack on Ukraine ordered by Russian President Vladimir Putin, President of the Czech Republic Miloš Zeman, has called upon the international community to sanction the Russian Federation by excluding it from SWIFT in order to disconnect the invading country from the international payment system.

"I think the time has come to resort to much harsher sanctions than originally planned," Zeman solemnly stated. "I am thinking in particular of the so-called SWIFT sanction, an international banking or financial network that would have led to the exclusion of the Russian Federation from the payment system," he underlined.

The proposed measure does not seem to be part of the first wave of sanctions being put in place against Russia that the U.S. and the European Union are implementing, with German Chancellor Olaf Scholz expressing that he did not agree that Russia should be excluded from the SWIFT system, at least not at this time.

Tighten Sanctions Against Russia

Ukraine’s own president, Volodymyr Zelensky, has asked the Western alliance to support sanctions and military action against Russia by announcing that Putin is about to start a “great war in Europe.” 

Although Russian opposition leader Garry Kasparov wrote a long thread on his Twitter account warning about Russia’s actions since 2014, the West did not heed him. 

“Western leaders rarely listened to Russian opposition leaders and rarely acted when they listened to us. Is it too much to ask that you listen to the Ukrainian leadership now?" Chided Kasparov.

The political activist and former world chess champion, persecuted by Putin, proposed a series of actions to stop the voracious expansionism of the Russian government. Among these, the expulsion of Russia from all international and financial institutions (PACE, Interpol, etc).

He said that Ukraine should be supported militarily with weapons, intelligence and cyber facilities “immediately”, “everything but boots (troops) on the ground”. Likewise, he proposes running interference with Russian propaganda by turning it off and silencing it to prevent the “dictator” from continuing to spread hate and lies.

“Bankrupt Putin's war machine. Freeze and seize the finances of Russia and his and his gang," Kasparov stated. At the same time, he asked the U.S. and the European Union to withdraw their ambassadors from Russia. He asserts that the message to Putin should be "stop or be isolated completely."

Why You Should Care

The consequences of Russia’s invasion of Ukraine became clear on Thursday in stock markets around the world. The stock markets in Asia, Europe and the U.S. sank, with Bitcoin especially suffering, while the price of oil, gas and commodities spiked.

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