Ukraine’s Response to Cryptocurrencies: Government Measures for Crypto Regulations

Ukraine has taken a significant stride towards the advancement of the Cryptocurrency Market by officially legalizing the Crypto sector in the country. On March 16, 2022, President Volodymyr Zelensky signed the law that removes many taxes on virtual assets and implements a uniform 2 percent tax on all transactions.
As a result of this new legislation, both foreign and Ukrainian cryptocurrency exchanges can now operate legally, and banks are permitted to open accounts for crypto companies in Ukraine. This law marks the first step in a series of laws that will define digital crypto-assets and their role in the Ukrainian market, while also regulating the current activities of the crypto gray market.
Ukraine Crypto Regulation 2022
On April 30, 2022, Ukraine launched a website for NFT and Crypto donations. According to the website, all proceeds from NFT sales will go to the non-profit organization Aid for Ukraine, which will utilize the funds to support humanitarian aid programs in the country. Even if you don’t own NFTs, you still have the option to donate crypto on the website.
Elon Musk, the world’s wealthiest individual, became the first public figure to be inducted into the Ukraine NFT museum’s ‘Hall of Fame’ on April 30, 2022. This virtual gallery of NFT-based artworks will showcase celebrities and public figures who have shown support for Ukraine during the ongoing war with Russia.
On April 25, 2022, Ukraine implemented a ban on residents purchasing crypto using the country’s currency, the Ukrainian Hryvnia. Individuals who wish to buy crypto will now have to use foreign currencies, and even then, purchases will be limited to 100,000 Ukrainian Hryvnia per month, which is equivalent to approximately $3,400.
On March 16, 2022, Ukraine officially legalized Bitcoin and other cryptocurrencies after President Zelenskyy signed the new law. This law allows foreign and Ukrainian crypto exchanges to operate legally within Ukraine.
Government’s Position on Cryptocurrencies
President Volodymyr Zelenskyy of Ukraine has established a legal framework for the cryptocurrency industry in the country. This framework permits foreign and Ukrainian virtual currency exchanges to operate legally under the supervision of the Ministry of Digital Transformation.
The ‘Virtual assets law’ of Ukraine defines the legal status and classification of cryptocurrencies, as well as the ownership of virtual assets. It also establishes financial monitoring measures for virtual assets.
The crypto market in Ukraine is regulated by the National Securities and Stock Market Commission, which oversees the licensing of crypto businesses and the implementation of state policies within the industry.
Ukraine is now accepting donations in the form of cryptocurrencies like Bitcoin and Ether for military defense against Russia. The country has also expanded the range of cryptocurrencies it accepts for donations and has raised over $63 million to date.
Furthermore, Ukraine has launched a website to accept donations from around the world. People can donate via cryptocurrencies, and the funds will be used for humanitarian purposes and to support Ukraine’s military.
Ukraine Crypto Taxation
In Ukraine, crypto transactions are considered business activities, and any income derived from these transactions is subject to an 18% personal income tax and a 1.5% military tax.
Individuals who engage in crypto transactions are required to pay a 5% personal income tax on their income from crypto transactions for a period of five years.
Additionally, the sale of cryptocurrencies and intermediary services related to the creation and circulation of virtual assets are not subject to value-added tax (VAT) in Ukraine.
Crypto Mining in Ukraine
Crypto mining exists in a legal gray area in Ukraine. Some individuals mine crypto at home, earning a few dollars per day, while others pursue larger profits through large-scale mining operations using warehouses filled with rows of computers and video game consoles dedicated to mining cryptocurrency.
Young tech specialists in Ukraine have shown a great interest in crypto mining, with an average monthly earning of $2,300, which is significantly higher than the average salary in Ukraine of $600 per month.
Historical Events and Announcements
On September 9, 2021, Ukraine became the latest country to legalize Bitcoin, signaling that governments worldwide are recognizing the permanence of Bitcoin. Prior to this, crypto in Ukraine existed in a legal gray area.
On April 7, 2021, Ukrainian civil servants were required to declare all the property they own or use, including digital assets such as crypto. While the country has yet to regulate digital assets officially, some individuals have included crypto in their declarations. A draft bill that establishes the legal status of crypto is still awaiting passage by the Ukrainian national parliament.
On February 1, 2021, Ukraine announced plans for a large cryptocurrency mining data center located next to nuclear power plants. The center would house state documents and serve as a mining facility for cryptocurrencies, although specific details about the project are limited.
On May 22, 2020, Ukraine introduced a new bill that allows crypto firms to open bank accounts. The Ministry of Digital Transformation of Ukraine published a crypto draft law on virtual assets in response to a deadline set by the Financial Action Task Force (FATF).
On February 21, 2020, the Ukrainian government made a concerted effort to engage in the adoption of cryptocurrencies. The National Bank of Ukraine launched its central bank digital currency project called e-hryvnia.
On June 11, 2019, Binance and Ukraine’s digital transformation ministry announced their cooperation to implement cryptocurrencies in the country. The two parties signed a memorandum of understanding (MoU) to collaborate on establishing the legal status of virtual assets and currencies in Ukraine.
Conclusion
Ukraine has emerged as one of the leading adopters of cryptocurrencies globally. According to a report by data firm Cahinalisis, which specializes in decentralized finance structures, Ukraine has made significant efforts to attract investments in related technologies.
Following the Russia-Ukraine war, Ukraine’s economy contracted by 45%. It is now crucial for the Ukrainian government to focus on further developing crypto frameworks, as this emerging industry has gained significant traction within the country.
Tags: Cryptocurrency