More governments are recognizing the staying power of cryptocurrencies like Bitcoin. Ukraine is the latest to join the growing list of countries that have legalized cryptocurrencies. Just this week, 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 social and economic interest.” Panama is also drafting new regulations for cryptocurrencies.
Related reading | Panama recognizes Bitcoin as a payment alternative, issues new regulations
In an almost unanimous vote, Ukraine’s parliament passed a law to legalize cryptocurrencies. Earlier last month, there were reports of a new cryptocurrency-related bill that would allow payments in cryptocurrencies. Until then, the bill was being prepared in Parliament for a second reading, according to a local report.
But on Wednesday, the Ukrainian parliament adopted a draft law “On Virtual Assets.” Thus, cryptocurrency is legally recognized in the country for the first time. The law will come into effect after lawmakers approve amendments to the country’s tax law regarding taxation of cryptocurrency transactions. Although the Ukrainian legislature has not yet voted on these changes.
This news comes after Ukrainian President Volodymyr Zelensky signed the Payment Services Law, another law related to digital currency. The law officially allowed the Central Bank of Ukraine to issue a central bank digital currency, the digital hryvnia.
What does the law say?
In contrast to El Salvador’s move to adopt Bitcoin as legal tender, Ukraine’s cryptocurrency law clearly states that cryptocurrencies do not constitute legal tender. However, this is an indication that the country is leaning more towards Bitcoin.
The new law recognizes virtual assets as both secured and unsecured intangible goods. However, cryptocurrencies are not accepted as a legal means of payment, and will not be allowed to be exchanged for other goods or services.
“Ukrainians will also be able to declare their income in virtual assets,” said Anastasia Bratko from the Ministry of Digital Transformation. She added that the law “guarantees judicial protection of the rights of owners of virtual assets.”
The law stipulates that the term “virtual financial assets” be issued by registered entities. Cryptocurrency market participants will be able to independently determine the value of virtual assets, open bank accounts to settle transactions, and seek judicial protection of the rights associated with them. Service providers are required to adhere to the country’s anti-money laundering regulations and prevent terrorist financing attempts using their platforms, just like traditional financial institutions.
History of cryptography in Ukraine
Cryptocurrency laws in Ukraine were previously somewhat gray. Cryptocurrency trading was not illegal in the country even before the legislation was passed. However, there were no laws around it. Local residents were allowed to buy and exchange virtual currencies, but companies and exchanges dealing in cryptocurrencies were often under close surveillance by law enforcement.
Two years ago, the Ministry of Digital Transformation was created in Ukraine. It has become very active in the crypto space. It has partnered with Binance to jointly work on new crypto rules. The Ministry of Digital Transformation has partnered with cryptocurrency exchange, currency.com, a Belarusian service that is claimed to be the first regulated exchange in the Commonwealth of Independent States (CIS) region to provide support for cryptocurrencies, fiat currencies, and fiat currencies, the government’s online portal reported. Premium assets.
Ukrainian authorities are taking a combative stance towards illegal cryptocurrency activities.
The total cryptocurrency market is worth $2.13 trillion Source: Total cryptocurrency market cap from TradingView.com
In August, the Security Service of Ukraine (SBU) blocked a network of “underground cryptocurrency exchanges” operating in the capital, Kyiv. The Ukrainian Security Service claimed that these exchanges were facilitating money laundering and providing anonymity for transactions.
Related reading | The Security Service of Ukraine shuts down illegal cryptocurrency exchanges
The current authorities have maintained a positive stance towards the country’s growing cryptocurrency industry. By 2022, the country plans to open the cryptocurrency market to companies and investors, according to the Kyiv Post.
On an official visit to the United States last month, Ukrainian President Volodymyr Zelensky called on major investors and venture capital funds to actively cooperate with Ukraine. He spoke of Ukraine’s “innovative legal market for virtual assets” as a selling point for investment. Minister of Digital Transformation, Mykhailo Fedorov, also said that the country is modernizing the payment market so that its national bank can issue digital currency.
Featured image from PYMNTS.com, chart from TradingView.com