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Legalization of Cryptocurrencies in Ukraine

Published:
September 9, 2021

The government of Ukraine is going to consider the draft law on the legalization of cryptocurrencies in Ukraine in the second reading, which will later become the basis for the next one.

  • On the territory of Ukraine, cryptocurrency can use as a means of payment.
  • Tax levy on income derived from transactions with cryptocurrencies will be charged at a rate of 5%.
  • Mining will become completely legal and will not require additional regulatory acts.

After consideration of this bill, in particular, for owners of cryptocurrency assets, some advantages will be available:

  • strict and sustainable regulation of the cryptocurrency industry;
  • ensuring the protection of digital assets at the legal level;
  • the ability to exchange cryptoassets legally, as well as declare cryptocurrency;
  • use of cryptocurrencies as means of payment.

To date, all of the above operations are not prohibition, however, and legally allowed. The adoption of the bill involves the full legalization of cryptocurrencies in Ukraine and of legalization work with cryptocurrencies. In addition, a new market offering intermediary services expected to emerge and develop along with this.

Despite the fact that Ukrainians will be able to pay with cryptocurrency, it will not recognize as an official means of payment. Acquiring operations allowed. These two points were mentioned by Alexander Bornyakov, Deputy Minister for Digital Transformation.

In addition, in a conversation with the Ministry of Finance, Bornyakov spoke about the further functioning of cryptocurrency exchanges in Ukraine. In order to be eligible to provide the relevant services, exchanges will be required to obtain a permit – not a license, but a permit. Obtaining this document will only require the provision of evidence of the necessary capital and the fact that the founders not included in the sanctions lists. You don’t even need to register a legal entity.

A mandatory requirement for fulfillment will be the passage of verification, which determined by international requirements, and by no means a whim of the Ukrainian regulatory authorities. Bornyakov notes that virtual assets are the future not only for Ukraine, but also for other countries. That is why, today it is necessary to start practicing fully regulated and legal activities.

Features of Taxation

Now legislators are actively working on the creation of the text of the bill in order to further amend the provisions of the Tax Code. Presumably, it planned to submit documents in September. Of the features, the following can be distinguished:

  • complete absence of VAT;
  • tax levy on the income received will pay in relation to the difference between the cost of selling and buying a cryptocurrency;
  • tax rate equal to 5%.

It is possible that the rate fixed in the final version of the bill will slightly increase, however, discussions on this issue have not yet terminate.

E-hryvnia Status

The Deputy Minister is in favor of creating E-hryvnia, emphasizing the main advantages.

  • Simplification of the procedure for transferring funds.
  • Ability to use smart contracts.
  • Improving the quality of emission control.
  • Journalists will be able to track government spending.

There is no data on the timing of the release of the E-hryvnia.

Mining

The bill will not affect mining in any way. However, at the same time, Bornyakov notes that the mining of cryptocurrencies in Ukraine considered a legal activity, respectively, in relation to it, additional regulatory provisions not required.

In addition, according to the bill, tokenization also allowed; however, no specific rules given.

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