Ukraine Introduces Bill for Bitcoin Reserve in Parliament

Ironically, it is Ukraine—teetering on the brink of bankruptcy—that now wants to allow its central bank to hold Bitcoin and other cryptocurrencies in its reserves. Is this madness—or could it actually help the country preserve value?

Ukrainian lawmakers have submitted a draft law to parliament (the Verkhovna Rada) that would permit the National Bank of Ukraine (NBU) to include cryptocurrencies in its reserves.

Specifically, Bill 13356 authorizes the NBU to „acquire, hold, sell, and repay ‚virtual assets.'“ Section 6 is particularly notable: it allows for the „repayment of virtual assets to international financial organizations, central banks of foreign states, and other creditors, including interest for the use of such funds and any other required payments.“

It sounds almost as if the option of taking out loans in cryptocurrencies is now on the table—as though Ukraine is preparing in advance for a future in which loans could also be issued in stablecoins. Perhaps the desperate circumstances are the driving force here—Ukraine can no longer afford to worry about the form when taking on debt.

Yaroslav Zhelezniak, the member of parliament who co-sponsored the bill, emphasizes that the central bank is being *granted* the right to hold virtual assets, not the obligation. Whether and to what extent they actually do so, he says, is up to the institution itself. However, he is convinced that properly managed crypto reserves could strengthen the country’s macroeconomic stability and help foster a digital economy.

In a video, Zhelezniak discusses potential state-held crypto reserves with Kyrylo Khomiakov, Binance’s regional head for Central and Eastern Europe. Binance advises various governments, including Ukraine, on crypto reserves. In addition to Zhelezniak, AI expert Petr Bilyk also contributed to drafting the bill. There appears to be a certain level of support from the regional digital economy sector.

However, whether the Verkhovna Rada will pass the bill, and to what extent the NBU will actually include virtual assets in its reserves, remains an open question at this time.

Central Banking Under Extreme Conditions

The NBU, as is well known, has been operating under extreme circumstances since February 2022. Russia’s senseless mass violence has devastated the country and forced Ukraine to invest ever more resources in defense—naturally at the expense of the wider economy. Furthermore, the country had to take on significant international debt to finance its military efforts. Unsurprisingly, the rating agency recently assigned Ukraine a „RD“ (“Restricted Default”) rating—the second-worst grade before outright default—according to recent reports.

The NBU is now striving, on the one hand, to keep the economy liquid—primarily by maintaining enough foreign currency reserves to fund imports—and, on the other, to keep the local currency, the hryvnia, somewhat stable. Considering the circumstances, it has performed relatively well. After sharp spikes in both interest rates and inflation, NBU Governor Andriy Pyshny has managed—since mid-2023—to lower them somewhat and keep them at bearable levels, aided in part by a multi-billion dollar IMF loan.

Nevertheless, at 15.9 percent, the hryvnia (UAH) continues to experience significant inflation. Since early 2022, its value has plunged from 30 UAH per euro to nearly 50. Russia’s war has played a major role, but the hryvnia has long been highly inflationary. Between 2013 and 2018, it fell from 10 to 33 UAH per euro; Ukraine was hit especially hard by the post-2017 global financial crisis.

The NBU, the French National Bank noted in October 2024, “has played a key role in the resilience and stability of the Ukrainian economy. Even in the most acute phase of the war, the NBU gave citizens and investors confidence that it would return to an inflation-targeting regime as quickly as possible.” One crucial factor was the NBU’s support for foreign exchange transactions. “Therefore, it isn’t possible to analyze modern central bank behavior during wartime without a thorough understanding of the country’s external positions.”

In this context, „external positions“ means reserves. The central bank currently holds reserves of $44.5 billion. Remarkably, those reserves have not declined—in fact, they have increased since 2022, though, for example, debt repayments in May reduced reserves by 4.6%. Such volatility would be almost unimaginable in a stable economy like Germany’s and underscores just how precarious the situation is.

In terms of composition, about 70 percent of the reserves are „securities“ (Цінні папери—most likely government bonds and equities), 23.8 percent are bank and demand deposits (Готівка, кор. рахунки, депозити—actively used reserves, e.g., to finance imports), and 6.5 percent is gold (Монетарне золото).

The vast majority of reserves are held in US dollars (87.2 percent), followed by euros (10.1 percent) and gold (6.5 percent); most securities carry a AA credit rating.

Can Bitcoin Resolve the Reserve Management Dilemma?

With this reserve composition, Ukraine fits the profile of a typical emerging economy: Absolute focus is placed on US dollar reserves, which the central bank accumulates almost automatically via an export-oriented economy. In wartime, this enables the NBU to maintain foreign trade liquidity and supply importers with dollars or euros as needed.

First World central banks, by contrast—especially in Europe—hold much larger proportions of gold. Most central banks in the ECB framework hold 60-70 percent of their reserves in gold; at current gold prices, they enjoy both strength and significant monetary policy flexibility. In order to shore up reserves against uncertainty, many central banks in the “second world” (or in the “one-and-a-halfth” world)—such as Poland, the Czech Republic, and also China—are now shifting toward gold, targeting about a 20 percent allocation.

For most central banks, this creates a dilemma. Keeping reserves in US dollars and euros allows Western central banks to export the costs of their money creation (i.e., inflation); but if “second world” banks aggressively purchase gold, they quickly drain global gold market liquidity, pushing prices higher and further widening the gap with established economies.

Bitcoin, as a fourth option—alongside foreign exchange (forex), foreign currencies, and IMF Special Drawing Rights—could offer a way out. Like gold, Bitcoin enables sovereign custody and preserves its value independent of macroeconomic cycles—but with fewer storage and transportation issues. Most importantly, Bitcoin allows “second world” central banks to benefit as first movers: Instead of buying late at high prices (and making existing reserve holders richer), they could profit when other central banks eventually follow suit.

For Ukraine, this could mean opportunity. The country is on the brink of default and has almost no domestic means of raising sufficient capital to defend itself and restore war destruction. Any tool to preserve value, stabilize, or grow reserves is likely welcome. The country is, in essence, already insolvent—it has little to lose, and much to gain.

How Could Ukraine Acquire Cryptocurrencies?

But does the NBU even have enough capital to allocate to crypto? The high proportion of bank deposits in the reserves suggests Ukraine requires most of these assets to finance imports. Fiscal wiggle room is quite limited, and neither the IMF nor European creditors would likely look kindly on the country diverting loans meant for defense and reconstruction into “speculation.”

The IMF is, in fact, vehemently opposed to countries building bitcoin reserves—as it demonstrated in the case of El Salvador. With more than $10 billion in outstanding debt, Ukraine is, after Argentina, the IMF’s second most indebted country. If and when it enters negotiations for refinancing its IMF debt line, it can be expected that the institution will strongly object to the creation of a crypto reserve.

Alternatively, Ukraine could potentially fill these reserves with bitcoin and other cryptocurrencies already in its possession, such as assets seized in criminal cases. According to the typical online trackers, Ukraine is said to hold 46,351 bitcoins—about four billion euros, or roughly 10 percent of its central bank reserves. However, this figure should be taken with a grain of salt. These are not official holdings but rather estimates based on self-reported bitcoin balances held by Ukrainian officials as of mid-2021. The NBU has neither control over these coins nor reliable verification of these amounts. One commentator suspected that corrupt officials were citing bitcoin appreciation as a pretext for wealth gains otherwise unaccounted for by their public salaries.

Conversely, Ukraine is a hub of Eastern European cybercrime. Since the outbreak of war, the country has sought greater cooperation with Western law enforcement agencies, resulting in some recurring busts and seizures of cryptocurrencies. These, along with cryptocurrency donations received since Russia’s invasion, do not appear in consolidated statistics. There is likely some leeway to transfer at least a few hundred or perhaps a few thousand bitcoins to the central bank.

It’s also possible that this is not just about Bitcoin or other value-appreciating cryptocurrencies, but equally or even more about stablecoins like USDC or USDT. These might help Ukraine access improved international payment rails, for instance by facilitating payments to Ukrainian IT professionals working for foreign clients or by smoothing international trade in grain, arms, and raw materials.

For now, however, this is all speculation—the law has not yet been enacted.