Ukrainian Regulator Demands Financial Records from Crypto Firms

• Ukraine has received over $70 million in crypto donations since its war with Russia began in 2022.
• The bulk of these crypto donations were used to secure military equipment and medical supplies.

The National Bank of Ukraine (NBU) recently required four Ukrainian cryptocurrency companies to file financial statements for the first two quarters of 2023, putting the cryptocurrency market in Ukraine under increasing scrutiny. Kuna, CoinPay, GEO Pay, and Qmall are among the companies affected by the NBU’s request. These companies have seven days to produce the needed financial data, per the NBU’s deadline.

Some documents required by the NBU include financial statements, operating information, and details on monetary transactions. The founder and CEO of Kuna Exchange, Michael Chobanyan, said he was surprised by the regulator’s demands, adding that crypto companies in Ukraine have never been asked to produce such records. Chobanyan questioned the NBU’s motive for its recent demands.

Chobanyan said,

Over the past two weeks, the first wave of searches in exchanges took place in Kiev and across Ukraine, which were triggered by the actions of the NBU, the Ministry of Internal Affairs, and the Security Service of Ukraine. […] There will be more searches and exchanges.

The Kuna CEO accused the NBU of attempting to destroy the growth of cryptocurrency and Web3 in Ukraine. Chobanyan claimed that over the last three months, Kuna’s exchange volumes have decreased by 90%

source: Chobanyan’s TelegramAlthough the Ukrainian government has adopted a hostile approach to the crypto industry, Chobanyan believes it could serve as a push for crypto companies in the country to explore other areas. He noted that Kuna plans to concentrate on the business-to-business (B2B) sector of the European market

The Kuna CEO said he was “grateful to the NBU for stimulating me to be a successful European company rather than a niche Ukrainian player.”

Ukraine Has Received Over $70 Million in Crypto Donations

Some crypto users have blasted the Ukrainian government for its treatment of the crypto industry since the country has received millions of dollars in crypto donations. Earlier this year, Chainalysis revealed that Ukraine has received over $70 million in donations. Such donations were reportedly provided to give the country extra funding to secure weapons and other materials as it continues its war with Russia.

At the time, ETH donors were said to have led the pack with around $28.9 million in donations, closely followed by Bitcoin and Tether donors. Donations also came in the form of non-fungible tokens (NFTs); one such NFT was sold by UkraineDAO at auction for $6.1 million.

JUST NOW:

Since the beginning of the war, 🇺🇦Ukraine has received about $225M in Crypto donations of which $41 million in #Bitcoin.#Crypto #UkraineWar $BTC #Donation $USDT #Ukraine $ETH pic.twitter.com/lPMEVf5gzy

— The Highlight (@thehighlight0) July 29, 2023

The speed of these crypto donations increased Ukraine’s capacity to respond to the Russian invasion, with over 80% of the total donations coming during the early stages of the war.

Interestingly, Ukrainian deputy digital minister Alex Bornyakov was filled with praise for cryptocurrencies at the time. In an interview with Yahoo Finance Bornyakov said,

If we used the traditional financial , it was going to take days. We were able to secure the purchase of vital items in no time at all via crypto, and what is amazing is that around 60% of suppliers were able to accept crypto. I didn’t expect this.

The majority of the cryptocurrency donations were used to purchase the nation’s military gear, armor, ious vehicles, and medical supplies.


source: TwitterPrevious research by Chainanalysis showed that crypto donations amplified the use of digital assets in Ukraine, putting the country among the highest adopters. But it remains to be seen if the NBU’s actions on crypto companies will reduce the industry’s popularity in Ukraine.