Max E.Fri, Feb 18, 2022 6:45 PM
Ukraine Has Almost Legalized Cryptocurrencies
On Thursday, February 17, the Verkhovna Rada (Ukrainian parliament) adopted bill No. 3637 on virtual assets, which was vetoed by President Volodymyr Zelensky in October 2021.
The bill containing additions from President Zelensky was supported by 272 people's deputies.
The bill defines the legal status of virtual assets and regulates issues of ownership and transactions with virtual currencies. When the law comes into force, cryptocurrencies in Ukraine will receive legal status.
This law will allow Ukrainian citizens to legally exchange cryptocurrency and reveal cryptos’ ownership in tax returns, as well as engage in blockchain business.
International cryptocurrency exchanges will be able to officially operate in Ukraine, but in order to do that, they will have to register.
In October 2021, President Volodymyr Zelensky sent the draft law, already adopted by the Rada, for revision, as it lacked the complete legal mechanisms necessary for its implementation. In particular, transparent and clear conditions were not provided for all participants in the cryptocurrency market.
The President also opposed the initiative to create a new central executive body that would regulate the rules of the virtual asset market due to its high cost. Zelensky proposed to give the rights to regulate the virtual asset market to the National Securities and Stock Market Commission, alongside the NBU.
Ukraine has a share of only 0.13% of all mining capacity in the world. Nevertheless, according to a study by Chainalysis, Ukraine ranks 4th in the world after Vietnam, India and Pakistan in terms of cryptocurrency adoption. The infrastructure for cryptocurrency trading in Ukraine is highly developed. Today, cryptocurrency can be purchased with hryvnia on more than half a dozen cryptocurrencies namely Binance, Huobi, Whitebit, Exmo, Kuna, BTC Trade UA.
According to the IMF Global Financial Review carried out in October 2021, Ukraine was among the top 5 countries in the world in terms of the number of users of Huobi and Bitfinex exchange platforms.
Currently, Ukraine has a chance of benefiting from the crypto industry development. However, the state needs to solve several fundamental tasks:
- Make the process of stealing electricity for mining more complicated.
- Make changes to the Tax Code in order to introduce taxation of virtual assets. Even a low tax rate will help raise significant funds in the budget. The existing law will come into full force only after the amendments to the Tax Code on the taxation of transactions with virtual assets are incorporated. So far, only one tax bill has been registered in the Rada – №2461, which was submitted to the Rada in November 2019.
- Introduce educational work in order to explain the risks of investing in cryptocurrencies for unskilled investors.