President of Ukraine legalizes cryptocurrencies by signing the law “On virtual assets”
President of Ukraine Volodymyr Zelensky signed the law “On Virtual Assets” passed by the parliament a month ago, which gives the green light to launch a legal market for virtual assets in Ukraine and bring the cryptocurrency transaction out of the shadows.
The law on financial monitoring has been in force in Ukraine since April 2020. Among other things, he introduced an audit of transactions with cryptocurrencies worth more than 30 thousand UAH, as well as blocking cryptocurrencies and confiscation of cryptocurrency for violations. At the same time, the status of cryptocurrencies and the procedure for dealing with them have not been regulated by law so far – a new law is designed to fill this gap.
Signed law:
- determines the legal status, classification, and ownership of virtual assets;
- determines market regulators – the National Bank of Ukraine and the National Commission on Securities and Stock Market;
- creates conditions for further formation of the legal field in the market of virtual assets;
- determines the list of providers of virtual assets and conditions of their registration;
- provides for the implementation of financial monitoring measures in the field of virtual assets.
The National Commission on Securities and Stock Market will:
- to form and implement state policy in the field of virtual assets;
- determine the order of turnover of virtual assets;
- issue permits to virtual asset service providers;
- to regulate, supervise and financially monitor this area.
What will change in practice?
- foreign and Ukrainian cryptocurrencies will operate legally;
- banks will open accounts for crypto companies;
- Ukrainians will be able to protect their savings in virtual assets;
- the state will guarantee judicial protection of rights to virtual assets.
Interestingly, the NBU has previously been strongly opposed to the use of virtual assets for payments for goods and services. It is unknown at this time what he will do after leaving the post.
This law is basic (roughly speaking, it determines the status of cryptocurrencies and allows transactions with them). Currently, the Ministry is actively working to amend the Tax and Civil Codes of Ukraine on the specifics of taxation of transactions with virtual assets – necessary for the full launch of the virtual assets market. Only after the adoption and entry into force of the latter will the basic law “On Virtual Assets” work. In September 2021, the chairman of the Committee on Finance, Tax and Customs Policy Danilo Hetmantsev said that they plan to do so within a year, but most likely because of the war, these deadlines will be postponed.
Cryptocurrency for the Ukrainian army
With the beginning of the war, cryptocurrencies became a powerful tool for attracting additional funding to support the Armed Forces of Ukraine. According to the Minister of Digital Transformation Mykhailo Fedorov, in more than three weeks of the war, the Crypto Fund of Ukraine has collected more than 54 million US dollars in cryptocurrencies.
The day before, the Ministry of Finance, in cooperation with the blockchain company Everstake and the cryptocurrency exchange FTX, launched the official website for crypto donations Aid For Ukraine.
“The crypto market is one of the most dynamic sectors of the digital economy. Last year, the total capitalization of the industry increased to $3 trillion. No other area can boast such a strong rate of capital growth. In Ukraine, the crypto industry is also actively developing“, – Mikhail Fedorov, Minister of Digital Transformation of Ukraine.
