Ukraine is progressing toward enacting legislation that will officially
permit the ownership of
digital assets
and create a structured taxation system for the industry.
Reports from local media indicate that the initial version of this
legislative proposal is slated for presentation to the Verkhovna Rada,
Ukraine’s parliament, later this month. The primary objective is to
harmonize Ukraine’s regulations concerning digital assets with the standards
set forth by the European Union. This includes provisions for transparency,
consumer safeguards, measures against money laundering (AML), and
licensing requirements. As Ukraine actively pursues EU membership by the
close of the decade, a process that is
currently underway, aligning its digital asset laws with EU regulations is of utmost
importance.
Danylo Hetmantsev, who leads the tax and finance committee within the
parliament,
stated
to a news source that the drafting of the law regarding the taxation of
virtual asset transactions is nearing completion. The expectation is that it
will be submitted for its initial reading in the Verkhovna Rada towards the
end of August 2025.
The impending bill will formally authorize digital asset ownership within the
nation, yet it will stop short of recognizing them as legal tender. This
approach mirrors the stance adopted by most
pro-crypto frameworks. El Salvador stands as the singular nation to have designated
cryptocurrencies as legal tender, a move that has proven to be
a significant setback
for President Nayib Bukele. While the Central African Republic followed suit
in 2022, the venture
proved short-lived, with the legislation being
rescinded
the subsequent year.
The proposed legislation encompasses a clause that permits Ukrainians who
acquired their digital assets prior to its enactment to declare these
holdings legally. This declaration will be subject to a one-time military
tax of 5% and a personal income tax of 5%. The government arrived at the
combined 10% tax rate following consultations with both domestic experts and
global entities such as the International Monetary Fund (IMF), according to
local media
reports.
Hetmantsev stressed that there is a need to provide the market with legal
protection. The state must recognize those who own crypto and
exchanges
that carry out this activity. It must give the owners the opportunity to
protect their rights because you cannot help but notice it’s too big to
ignore.
He further cautioned digital asset holders against operating covertly
after the law is instated, suggesting that with every service requiring
a license, any concealed activity is likely to be uncovered, leading to
corresponding charges.
A structured taxation system has the potential to generate substantial
revenue for the Ukrainian government, which is currently facing financial
constraints due to its ongoing conflict with Russia.
According
to a study by Global Ledger, the government has potentially missed out on
at least $200 million in taxes from virtual asset service providers
(VASPs) and exchanges during the last four years. These platforms
reportedly generated more than $1.1 billion in profits from Ukrainian
traders during that same timeframe.
Ukraine’s central bank supports new law
Andriy Pyshnyy, the Governor of the National Bank of Ukraine, has voiced his
support for the draft legislation. However, he maintains that
cryptocurrencies
should not be designated as legal tender.
In a recent interview, he
stated
that virtual assets cannot function as a means of payment and should not
compromise the effectiveness of the existing monetary instruments. There
should be no transfer of monetary powers or undermining of the National
Bank’s capabilities due to the legalization of virtual assets.
He believes the new rules will regulate the market and give the central bank
more insights into the transactions involved. However, while Pyshnyy is eager
to oversee the sector, lawmakers are remain undecided on which government
agency should be given jurisdiction over ‘crypto.’
In June, Hetmantsev, the head of the parliamentary committee on finance and
taxation,
said
legislators are deciding between NBU, the Ministry of Digital
Transformation, and the National Securities and Stock Market Commission.
However, the NBU is currently the most likely to be handed authority over
the sector as it’s “an institutionally capable regulator with experience in
the banking and non-banking sectors,” Hetmantsev said.
Ukraine’s ‘crypto’ regulation will be important given the government’s
massive stash. The Eastern European nation holds 46,351 BTC, worth over
$5.6 billion, which ranks only behind the United States, China, and the
United Kingdom. Ukraine also recently
proposed
a BTC reserve, joining others like the U.S., the Czech Republic, Brazil,
Poland, and more.
Watch: Breaking down solutions to blockchain regulation hurdles
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