Ukraine has just passed a law legalising crypto-currencies. Under discussion for several months, the legislation clarifies the regulatory framework in order to facilitate the emergence of companies specialising in the digital asset sector. However, the relaxation decreed remains very different from the Bitcoin law enacted in El Salvador and the future Russian legislation. Explanation
Ukraine adopts legal framework for Bitcoin (BTC) and cryptocurrencies
On February 17, 2022, the Ukrainian government passed a law to legalize cryptocurrencies, including the all-important Bitcoin (BTC). Announced last September, the legislation aims to clarify the rights of crypto asset holders resident in Ukraine. It was passed by a large majority. 272 out of 365 deputies supported the law.
Until now, digital assets were not banned in Ukraine, but they still operated in a grey area of the law. Now the government officially allows Ukrainians to own, manage and use digital assets.
Most importantly, a company is officially free to offer cryptocurrency-related services to Ukrainians. This simplified regulatory framework should facilitate the emergence of exchanges or banks enabling cryptocurrency trading in Ukraine.
Ukraine is already in top-5 countries on cryptocurrency usage. Today we made one more step forward: Parliament adopted law on virtual assets! This will legalize crypto exchangers and cryptocurrencies, and Ukrainians could protect their assets from possible abuse or fraud.
– Mykhailo Fedorov (@FedorovMykhailo) February 17, 2022
Today we have gone one step further: Parliament has passed a law on virtual goods! This will legalise cryptocurrency exchange platforms and cryptocurrencies, and Ukrainians will be able to protect their assets from possible abuse or fraud,” Mykhailo Fedorov, the country’s deputy prime minister and minister of digital transformation, said on his Twitter account.
The parliament has appointed two bodies to regulate the sector: the National Securities and Stock Market Commission of Ukraine (NSSMC) and the National Bank of Ukraine (BNU). Last year, the Central Bank had already pledged to support the adoption of cryptoassets.
The law removes the Ministry of Digital Transformation from the list of entities intended to supervise the sector. Interviewed by our Cointelegraph colleagues, Alex Bornyakov, Ukraine’s Deputy Minister of Digital Transformation, believes that this simplification is a good thing.
“The reduction of regulatory bodies can actually significantly accelerate the launch of the crypto market,” says Alex Bornyakov.
As Mikhail Fedorov suggests in the press release issued by the parliament, this legal framework is primarily intended to attract companies in the sector to Ukraine.
The new law is an additional opportunity for business development in our country. Foreign and Ukrainian crypto companies will be able to operate legally. […] Market participants will have legal protection,” says Mikhail Fedorov.
Alex Bornyakov is of the same opinion. The minister highlights “the potential of the global cryptocurrency industry” and the gargantuan growth of the sector. Thanks to the adopted law, the politician believes that Ukraine can become one of the leading countries in “this innovative field”.
The legislation, which includes several amendments by President Volodymyr Zelensky, does not refer to cryptocurrencies as digital assets, but as “virtual assets”. This term covers all crypto-currencies, whether it is a decentralised currency such as Bitcoin or a stablecoin.
However, the law differentiates between a “secured virtual asset” and an “unsecured virtual asset”. Ukraine considers a stablecoin, such as the USDC or USDT, to be a “secured virtual asset”. This is because the currency is based on the price of a fiat currency. In this case, it is the US dollar. Other crypto-currencies, whose price is volatile, are considered “unsecured”.
The legislation is intended to address the growing appetite of Ukrainians for crypto-currencies. As Mykhailo Fedorov points out, Ukraine “is already in the top 5 countries in terms of cryptocurrency use”.
An assertion corroborated by a Chainalysis study published last year. According to the blockchain analysis firm’s annual report, Ukraine is the 4th most advanced country in cryptocurrency adoption, behind Pakistan, India and Vietnam. One reason for the success of cryptocurrencies among the Ukrainian population is the low level of banking among its inhabitants.
