Ukraine will soon legalize Cryptocurrency transactions in the country
Ukrainian residents will use, trade legally, and purchase through cryptocurrencies as soon as the law "On Virtual Assets" is adopted. The law will benefit residents of Ukraine who own cryptocurrency. The cryptocurrency market will be regulated through this law. In addition, Ukrainians might obtain lower taxes and have more alternatives for new products and services.
Oleksandr Bornyakov, Ukraine’s Deputy Minister of Digital Transformation, said that this law would legalise virtual assets which common people can use.
The official predicts a transformation in a new market for services that permit crypto coins to be used, exchanged, and stored in payments. The bill states that coins are not a method of payment in the country. However, crypto will soon be legal to be used to purchase items through a third-party entity that converts instantly to Ukrainian hryvnia, expressed Bornyakov. This approach is similar to foreign legal tenders like the British pound that can be spent through an ATM card.
Ukraine's parliament called Verkhovna Rada went through the first reading of the virtual assets bill in December. The bill has passed through various revisions, and in June, its final adoption was recommended by the Digital Transformation parliamentary Committee. This update had opposition coming from Kyiv regulators. In July, the government and private sectors showcased the plan to reach cryptocurrency integration into Ukraine’s economy within the next thirty-six months. Looking for more ways to invest in cryptocurrency? Click here.
Cryptocurrency exchanges need to secure permits to legally operate in Ukraine and will be subject to monitoring by regulators, expressed Bornyakov. However, the process of securing permits is not equivalent to licensing. There is no need to register as a legal entity for foreign-based trading platforms in the said country. However, they will be required to reach a specific capital requirement. Bornyakov further explained that there is a global coverage for businesses that have virtual assets. If the country regulates the registration of these platforms in Ukraine, this will hamper the entrance of crypto exchanges in the country.
The establishment of customer verification requirements of Ukraine should be aligned with international recommendations. Bornyakov believes that digital assets will revolutionise the world. However, its possibility of becoming mainstream technology will be eliminated if it will be used for illegal transactions such as money laundering. He emphasised that despite this possible ruling, the government of Ukraine does not want to overregulate the cryptocurrency market as it will hamper its development. Take note that the cryptocurrency market is very volatile. Thus, there is a risk involved when engaging with this platform.
The bill creates a new regulatory board - the National Service for Regulation of Virtual Assets. This national agency will regulate crypto companies that will ask for permits to operate in Ukraine. Regulators such as the Ministry of Finance, National Securities and Stock Market Commission (NSSMC), and the National Bank of Ukraine (NBU) will be furnished with their responsibilities. The NSSMC will monitor crypto derivatives while the NBU will take care of stablecoins.
The minister said that certain provisions in the bill refer to crypto taxation, and the possible amendments to the Tax Code are being studied and will be submitted to the Rada in September. Ukraine would like to implement that crypto transactions are non-VATable, and tax will be obtained from the variation between the purchase and sale values. Furthermore, the tax rate for individuals is proposed by the Digital Ministry to be reduced from 19.5% to 5%.
It has almost been two years since Bornyakov announced that Minister Mikhail Fedorov would authorise the legalisation of cryptocurrencies. Furthermore, he said that individuals who are involved in cryptocurrencies should be honest taxpayers as he envisions Ukraine to be generating revenues from cryptocurrency traders.
The momentum to legalise cryptocurrency as part of the Digital Transformation ministry to simplify transactions with the Ukrainian government with a digital service. Fedorov said that transactions with the government should be non-invasive and convenient. It should have a similar feeling when a person transacts with Airbnb, Booking, or Uber.
This article only serves as a guide and not financial advice.