Ukraine Passes New Law to Legalize Bitcoin and Other Cryptocurrencies

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More and more governments are recognizing the sustainability of cryptocurrencies like bitcoin. Ukraine is the latest to join the growing list of countries that have legalized crypto. This week again, El Salvador became the first country to adopt bitcoin as legal tender. Two weeks ago, Cuba passed a law to recognize and regulate cryptocurrencies, citing reasons of socio-economic interest. Panama is also drafting new cryptocurrency regulations.

Related Reading | Panama To Recognize Bitcoin As Payment Alternative, Issues New Regulations

In an almost unanimous vote, the Ukrainian parliament passed a law to legalize cryptocurrency. Earlier last month, there had been reports of a new cryptocurrency-related bill that would allow payments in cryptocurrency. As a result, the bill was being prepared in parliament for second reading, according to a local report.

On Wednesday, however, the Ukrainian parliament passed the bill “On virtual assets”. Thus legally recognizing the cryptocurrency in the country for the first time. The law will come into force after lawmakers approve amendments to the country’s tax code regarding the taxation of cryptocurrency transactions. However, the Ukrainian legislature has not yet voted on these changes.

The news comes after Ukrainian President Volodymyr Zelensky signed the Payment Services Law, another law related to digital currency. The law officially authorized the central bank of Ukraine to issue a central bank digital currency, the digital hryvnia.

What the law says

Unlike El Salvador’s decision to adopt bitcoin as legal tender, Ukraine’s crypto law clearly states that cryptocurrencies are not legal tender. However, it does indicate that the country is leaning more into bitcoin.

The new law recognizes virtual assets as both secured and unsecured intangibles. However, cryptocurrencies are not accepted as a legal means of payment and their exchange for other goods or services will not be allowed.

Ukrainians will also be able to declare their income in virtual assets, said Anastasia Bratko of the Ministry of Digital Transformation. She added that the law guarantees judicial protection of the rights of owners of virtual assets.

The law requires that the term financial virtual assets be issued by registered entities. Participants in the crypto market will be able to independently determine the value of virtual assets, open bank accounts to settle transactions, and seek legal protection for associated rights. Service providers are required to comply with national anti-money laundering regulations and prevent terrorist financing attempts using their platforms, just like traditional financial institutions.

History of crypto in Ukraine

Crypto laws in Ukraine were previously somewhat gray. Cryptocurrency trading was not illegal in the country even before the legislation. However, there was no law around it. Locals were allowed to buy and trade virtual currencies, but businesses and exchanges dealing with crypto were often closely watched by law enforcement.

Two years ago the Ukrainian Ministry of Digital Transformation was established. He became very active in the field of cryptography. It has partnered with Binance to jointly work on new crypto rules. The government’s online portal reported that the Ministry of Digital Transformation has partnered with a crypto exchange, Currency.com, a Belarusian service that is said to be the first regulated exchange in the Commonwealth of Independent States (CIS) region in provide support for cryptocurrencies, fiat and tokenized assets. .

Ukrainian authorities have taken a combative stance against illegal crypto activity.

Total crypto market at $ 2.13 trillion | Source: Total Crypto Market Cap from TradingView.com

In August, the Ukrainian Security Service (SBU) blocked a network of underground cryptocurrency exchanges operating in the capital Kiev. The SBU alleged that these exchanges facilitated money laundering and ensured the anonymity of transactions.

Related reading | Ukrainian security service shuts down illegal cryptocurrency exchanges

The current authorities have maintained a positive attitude towards the country’s growing crypto industry. By 2022, the country plans to open the cryptocurrency market to businesses and investors, according to this Kyiv Post.

During an official state visit to the United States last month, Ukrainian President Volodymyr Zelensky called on top investors, venture capital funds, to actively cooperate with Ukraine. He spoke of Ukraine’s emerging innovative legal market for virtual assets as a selling point for investment. Digital Transformation Minister Mykhailo Fedorov also said the country is modernizing its payments market so that its National Bank can issue digital currency.

Featured image from PYMNTS.com, chart from TradingView.com

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