Bitcoin will become legal in Ukraine

Owners of cryptocurrencies in Ukraine will be able to legally exchange bitcoin and altcoins, enter them in tax declarations, as well as start a blockchain business. Foreign cryptocurrency exchanges, in turn, for the first time will be able to work in the country completely officially.

Such changes are stipulated by the draft law No 3637 “On virtual assets”. For its adoption, taking into account the presidential proposals voted 272 people’s deputies.

The document was adopted in the second reading back in September-2021. But then the document was returned to parliament by President Volodymyr Zelensky.

The president’s main proposal is to cancel the creation of a new structure under the Ministry of Digital Transformation, which should control the digital currency market. Instead, Zelensky suggested transferring the regulation to the National Commission on Securities and Stock Market (NCSSM).

After all, that is how the market of virtual assets is regulated in world practice. For example, the SEC acts as a regulator in the USA, BaFin – in Germany, and FSA – in UK. In addition, the creation of a new regulator would require additional funds from the budget.

What will change?

• The legal field of virtual assets market will appear (classification, property rights and other key legal definitions);
• Ukraine will follow the FATF recommendations for financial monitoring of virtual asset market;
• the main regulator of the market will be the Ministry of Digital Information, crypto-exchanges – NCCSD;
• an official list of virtual asset service providers will appear.

It is important that international crypto-exchanges will be required to register to work in Ukraine. These companies will begin to pay taxes to the Ukrainian budget, and in addition, they will have to regularly report on their activities to regulators. However, this will require additional amendments to the tax legislation.

Other detailed mechanisms will also be spelled out additionally – in additional laws and bylaws. This document only introduces the cryptocurrency market to the legal field and establishes the framework of its work.

Status of bitcoin and cryptocurrencies in Ukraine

Until the new law is signed by the president and entered into force, the legal status of cryptocurrencies in the country remains uncertain:

• The NBU refused to recognize Bitcoin as a currency;
• cryptocurrencies are also not recognized as a means of payment;
• Ukrainian regulators, including the NBU, decided that a system of control over the cryptocurrency market should be developed;
• The Ministry of Economy supported the idea in 2018, developing the Concept of state policy in the sphere of virtual assets – this document was intended to help the authors of the relevant bill.