Ukrainian crypto legislation is a step in the right direction – TechCrunch

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David Kirichenko Contributor

David Kirichenko is an editor at Euromaidan Press and writes on cyberspace, digital currencies, economics and technology.

The cryptocurrency could soon be used legally in Ukraine, once President Volodymyr Zelensky signs the legislation passed by the Ukrainian Parliament on September 8.

This law will protect owners of virtual assets and exchange platforms from fraud, and rumors abound that Ukraine is preparing to transition to a fully digital economy and considers Bitcoin to be legal tender. The legislation will help determine how Ukraine will regulate the cryptocurrency market in the future and officially allow Bitcoin businesses to operate in the country.

Since Bitcoin’s inception in 2009, cryptocurrencies have grown from a fringe subject and little-known technology to a prolific financial instrument that has galvanized the public and has grown to play a bigger role in reshaping our Mondial economy. The cryptocurrency economy is the next trillion dollar opportunity and is still in the early stages of innovation.

The Ukrainian government, or more accurately the Ukrainian public, understands this and encourages societal progress towards taking the necessary measures to participate in this economic growth with recent legislation. Ukrainian officials have reportedly traveled to El Salvador to meet with officials there to learn more about the implementation after the Central American country made Bitcoin legal.

Cryptocurrency is a form of currency traded only in the digital world and intended to be completely decentralized from government. This allows users to oversee and approve transitions on the blockchain, a decentralized public ledger, which is a growing list of records that cannot be changed. These open online ledgers eliminate the need for a trusted intermediary (such as a bank).

Drafting pro-crypto legislation is an important step for the booming industry that reflects the sentiment of the Ukrainian public. Cryptocurrencies are popular in the country and it is estimated that more than 5.5 million people, or 12.7% of Ukraine’s total population, currently own some form of cryptocurrency, according to the platform. payment provider Triple A. Blockchain data company Chainalysis has ranked Ukrainians among the top users of cryptocurrency. worldwide in September 2020.

The cryptocurrency mining space has interesting implications for Ukraine’s energy sector, as Ukraine produces almost half of its electricity from 15 nuclear reactors. Ukraine’s Energy Ministry has argued that mining cryptocurrency is a contemporary and efficient way to use excess energy. The Ministry of Energy has sought innovative solutions to combat energy waste and improve efficiency.

The Bitcoin mining industry makes it an ideal partner to utilize the surplus energy from nuclear reactors by taking the excess electricity and using it for cryptocurrency mining. This would help maintain power generation requirements while helping to attract new investment funds for Ukrainian nuclear power plants.

This opportunity positions the Ukrainian government as a strong support node for the entire mining network. It will help provide clean and sustainable Bitcoin mining as well as a free market solution to inefficiencies in the energy sector.

The financial implications are vast. The state-owned company that operates the country’s nuclear power plants, NAEC Energoatom, recorded losses of over US $ 170 million in 2020. This gives Ukraine’s energy sector some life to emerge from a black hole. The project is already underway, as Energoatom has reached an agreement that will allow it to supply energy to mining operators in the crypto mining division Bitfurys. The Ukrainian government could mine bitcoin and keep it in its reserves, or take the mined bitcoin and deposit it into an account for each citizen, or sell bitcoin to increase national GDP.

Additionally, Ukraine sent and received over $ 8 billion in cryptocurrency from July 2019 to June 2020. Ukraine is the birthplace of teams and organizations that have created crypto startups like Weld Money , Hacken and Propy; the country also has a strong industry of crypto and blockchain developers. Ukraine already has more than 100 companies in the cryptocurrency sector.

Ukrainians made around $ 400 million from Bitcoin investments in 2020, making Ukrainian cryptocurrency investors one of the richest in the world. The cryptocurrency craze in Ukraine is not only limited to the public, but has been embraced by Ukrainian officials and large swathes of government. In early 2021, Ukrainian civil authorities reported owning more than $ 2.6 billion worth of bitcoins, and the report states that the largest number of cryptocurrency owners work in city councils, the Ministry of Defense and the national police.

According to the World Bank, almost 10% of Ukraine’s GDP in 2020 came from personal remittances sent to Ukraine. Many Ukrainians have emigrated and continue to send money to their families and continue to pay exorbitant money transfer fees through traditional banking methods. However, cryptocurrency changed everything: It allows Ukrainians to send money faster and cheaper across borders without a bank or service acting as an intermediary.

Before the days of Bitcoin, the bank or service converted the money, transferred the funds to the recipient’s country, and then converted them back to the local currency. However, a World Bank study found that fees average 6.38% of the amount sent.

Worse than the fees, the Ukrainian public has very little confidence in the Ukrainian banking system due to severe corruption. Several large banks collapsed, the Ukrainian government declared more than 90 banks insolvent, and many people lost money due to a constant stream of banking scandals. In 2016, the government stepped in to nationalize PrivatBank, which represented 20% of Ukraine’s banking sector, after the government discovered that more than $ 5 billion was on the books. The banking sector is widely seen as dysfunctional and dominated by corrupt oligarchs.

After Russia invaded Ukraine in 2014, the Ukrainian economy plunged and Ukraine’s national currency, the hryvnia, lost 70% of its value against the dollar. This further undermined the savings and purchasing power of the public. Now, the average person with a small savings will often hide their money at home and not bother to store it in a bank.

Even before this infamous pattern of behavior, Ukraine’s banking sector did not develop in the same way as in the West after the collapse of the Soviet Union. The process of transferring funds was problematic due to the lack of infrastructure. Unscrupulous methods were then developed with financial instruments such as vouchers and exchanges that allowed for extensive money laundering programs and questionable business practices.

With high degrees of corruption in government, business and banking sectors; illegal asset seizures by corrupt politicians; and the collapse of several of the major Ukrainian banks, it is entirely reasonable that the decentralized nature of Bitcoin would appeal to the people. Ukrainians have turned to cryptocurrency to protect their assets and the young and innovative population is looking forward to the future and leaving behind an outrageous and broken system. The desire for change is great and the prospects for cryptocurrency for Ukraine are enormous.

A government-backed framework will allow more businesses to expand in the space, fund state taxes, and further stimulate innovation, as cryptocurrency adoption will only increase . With high adoption rates and the state promoting pro-cryptocurrency legislation, Ukraine has the opportunity to become one of the world’s leading hubs for cryptocurrency, and this opportunity should not be wasted.

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