Ukraine’s Ministry of Digital Transformation announced that the country has officially legalized cryptocurrencies after President Volodymyr Zelenskyy signed the new bill “On Virtual Assets” into law on March 16th.
Ukraine has legalized the crypto sector — @ZelenskyyUa signed a law. From now on foreign and Ukrainian cryptocurrencies exchanges will operate legally and banks will open accounts for crypto companies. It is an important step towards the development of the VA market in Ukraine. pic.twitter.com/lqqO1J9r1k
— Міністерство цифрової трансформації України (@mintsyfra) March 16, 2022
Crypto will soon be considered a legal, regulated, asset class in the country which is currently embroiled in a war with Russia. However, the new law does not classify virtual assets as a payment instrument.
The move follows a massive outpouring of crypto donations made to the country to support its efforts in fighting back Russia’s invasion. Ukraine has received millions in donations made via cryptocurrencies like Bitcoin and Ethereum, among others. The country was even donated a CryptoPunk NFT.
The “On Virtual Assets” bill
Although crypto has not been illegal in Ukraine, the industry has been operating in a legal grey area. Officially recognizing the industry and making moves to regulate it is a positive sign for adoption and likely a side effect of the massive support the country has received via crypto.
The “On Virtual Assets” bill covers a variety of aspects in terms of legalizing cryptocurrencies, the main ones being classification, supervision, licensing, and regulation.
The bill was initially put forth by the government in September 2021, however, it was rejected by Zelensky at the time and sent back for revision with several proposed amendments. The government resubmitted a revised version of the bill on February 17th after Parliament approved it.
“Our vision with President Zelensky — before the war — was to build the world’s most convenient country in terms of digitally available public services.”
Ukraine’s vice prime minister Mykhailo Fedorov told Tech Crunch in an interview recently.
The new crypto law
Under the new law, crypto exchanges and other companies offering crypto-related services will be able to operate legally and have their assets protected and regulated. The law will enable both old and new players to register with relevant regulators and apply for banking-related services to further legitimize the industry. It will also create mechanisms to protect consumers and investors.
The law defines what can and cannot be considered a virtual asset in Ukraine and establishes a proper legal framework for the emerging industry. The law’s wording allows not the only cryptocurrency to be a virtual asset, but also tokens, game skins, and NFTs. Additionally, it includes initial plans for how crypto will be taxed and proposals for future laws.
Ukraine has tasked three state agencies to serve as regulators for the burgeoning crypto industry — the National Bank of Ukraine, the National Commission on Securities, and the stock market. The three entities will work together to establish the proposed legal framework and further develop the regulatory landscape for the nascent industry.
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