The Future of Cryptocurrency in Ukraine: A Step Towards Legalization
Ukraine is on the brink of legalizing cryptocurrency, as a new bill is set to be finalized by the first quarter of 2025.
Danylo Hetmantsev, the head of the Ukrainian Parliament’s Committee on Finance, Tax, and Customs Policy, has confirmed that the draft law is nearing completion and will soon be ready for its first reading, as reported by Pravda.
The development of this legislation has been a collaborative effort between the Ukrainian government, the National Bank of Ukraine, and the International Monetary Fund.
Once enacted, the proposed law will provide regulations for cryptocurrency transactions and introduce a taxation model similar to that of securities. Profits from crypto assets will be subject to taxation when they are converted into traditional currencies. Hetmantsev has emphasized the need for caution in granting tax exemptions for cryptocurrencies, citing concerns about potential tax evasion in conventional markets.
The decision to exclude tax exemptions in the draft bill is a deliberate one, aimed at preventing misuse. Consultations with European experts and the IMF have played a crucial role in shaping Ukraine’s cautious stance on cryptocurrency taxation.
Ukraine’s Growing Interest in Cryptocurrency
Ukraine’s move towards legalizing cryptocurrency comes amidst its increasing interest in digital assets. The country has already embraced blockchain technology for various state functions.
During Russia’s invasion of Ukraine, the country received significant cryptocurrency donations, which were utilized for humanitarian and military purposes. This highlighted the benefits of borderless and decentralized funds during times of crisis.
In late 2023, Ukraine implemented the Financial Action Task Force (FATF) standards for cryptocurrencies to ensure international compliance and avoid being placed on the grey list.
While the legal framework for cryptocurrency in Ukraine is close to completion, the bill is expected to undergo its first reading post the New Year.