Ukraine’s NBU Firmly Rejects Crypto in Reserves: Citing Volatility, EU & IMF Alignment

Ukraine’s central bank has firmly rejected the integration of virtual assets into the nation’s foreign currency reserves, signaling a cautious approach that prioritizes financial stability and alignment with European Union and International Monetary Fund standards. This decision by the National Bank of Ukraine (NBU) highlights a significant divergence from the more permissive stances adopted by some other nations, underscoring the complexities and perceived risks associated with institutional crypto adoption.

• Prioritization of financial stability and adherence to European Union and International Monetary Fund standards.
• Virtual assets are considered high-risk and their integration into reserves is deemed premature.
• The inherent volatility of cryptocurrencies could significantly undermine the stability and reliability of national reserves.
• A lack of a universally accepted understanding and a unified global regulatory framework for virtual assets.

NBU’s Stance and Rationale

Serhiy Nikolaychuk, First Deputy Governor of the NBU, articulated the central bank’s position, deeming any such move as premature. He emphasized that the vast majority of cryptocurrencies remain high-risk assets, a fundamental conflict with the core principle of managing international reserves, which demands security and stability. Nikolaychuk further explained that the inherent volatility of virtual assets could significantly undermine the overall size and reliability of Ukraine’s reserves. The NBU also cited the absence of a universally accepted understanding of virtual assets and a unified global regulatory framework as critical impediments to their inclusion.

Legislative Context and International Alignment

This stance comes in response to a legislative initiative by a group of Ukrainian lawmakers, who had drafted a bill in May to permit the NBU to add cryptocurrencies to its gold and foreign exchange holdings. The proposed legislation was subsequently filed with the Verkhovna Rada, Ukraine’s parliament, in June. However, Nikolaychuk revealed that the central bank had not been consulted by the bill’s sponsors, raising questions about the coordinated approach to financial policy.

A key concern for the NBU is the potential for such a move to hinder Ukraine’s ambitions for integration into the European Union. The European Central Bank (ECB) maintains a clear and strong position against including crypto assets in the reserves of EU member states’ central banks, prioritizing liquidity, safety, and protection. This sentiment was echoed by ECB President Christine Lagarde, who expressed confidence that cryptocurrencies like Bitcoin would not enter the reserves of any central banks within the ECB’s General Council. Even Aleš Michl, Governor of the Czech National Bank, who initially suggested exploring crypto diversification, later acknowledged the extreme price volatility, noting that crypto holdings could be worth “either zero or a huge amount.”

Beyond EU alignment, the NBU indicated that incorporating crypto assets into its reserves would also contravene the requirements of the Technical Memorandum under Ukraine’s Extended Fund Facility with the International Monetary Fund (IMF). This dual pressure from both European integration goals and international financial agreements reinforces the NBU’s conservative position.

Domestic Obstacles and Global Divergence

Domestically, the legislative push for crypto reserves appears to have stalled. Danylo Hetmantsev, chairman of the parliamentary committee on finance, taxation, and customs policy, stated in August that the Rada had no plans to adopt the crypto reserve bill, citing high volatility—a position aligned with the NBU. While the draft law would have granted the central bank the power, not an obligation, to acquire cryptocurrencies, the prevailing view among key financial policymakers remains one of caution.

In stark contrast, the United States, under President Donald Trump, has pursued a different strategic direction, with the administration having fulfilled a promise to create a strategic Bitcoin reserve after his election. This divergent approach highlights the ongoing global debate on central bank crypto adoption. Paradoxically, Ukraine has experienced a surge in crypto usage since the 2022 invasion by neighboring Russia, as the NBU restricted traditional financial transactions to prevent capital flight. Despite this increased adoption, the country faces significant challenges, including an estimated loss of billions of U.S. dollars due to crypto-related crime, largely attributed to the absence of a comprehensive regulatory framework for its virtual asset market.