Emily Walker
Amidst a thriving market, Ukraine’s legislators are poised to officially legalize cryptocurrencies soon. Reports indicate that the parliament is drafting new legislation, although it will not include tax breaks for digital assets.
Ukraine’s Move to Legalize Cryptocurrencies
During a forum on “Domestic Investment Opportunities,” Danylo Hetmantsev, who leads Ukraine’s Parliament Committee on Finance, Tax, and Customs Policy, announced plans to formalize the legal status of digital assets within the next few months.
According to Hetmantsev, the working group in parliament is collaborating with the National Bank and the International Monetary Fund (IMF) to create a legislative draft aimed for early 2025 approval, as highlighted by the news source Ukrainska Pravda reported:
We are in the final stages of preparing a draft law for cryptocurrency, which we expect to be ready early next year. Our goal is to have this legislation approved in the first quarter of 2025.
He further clarified that there would be no tax exemptions for digital assets; instead, they would adopt a framework akin to that of securities, ensuring taxation on profits only upon conversion to currency.
Hetmantsev emphasized a careful strategy regarding tax exemptions for cryptocurrencies, citing consultations with the IMF and European experts to avoid facilitating tax evasion.
Overview of Ukraine’s Crypto Regulations
In March 2022, President Volodymyr Zelenskyy ratified the “On Virtual Assets” law, which established a foundational legal structure for the digital asset industry in Ukraine. However, by early 2024, implementation was stalled due to pending revisions to the Tax Code.
This delay has resulted in significant losses in potential tax income, as the existing lack of regulations meant that cryptocurrency exchanges faced no legal tax obligations on their revenues related to digital assets.
In April, the IMF urged Ukraine to finalize its cryptocurrency regulation by the conclusion of 2024. As per a Facebook update from Deputy Minister of Digital Transformation Oleksandr Bornyakov, the IMF expressed concerns that the unregulated nature of this emerging sector threatens “price stability and monetary efficiency.”
Bornyakov confirmed that the Ministry of Digital Transformation emphasizes the urgency of establishing regulatory measures for the crypto market, with two draft laws already proposed for parliamentary consideration.
He also noted the positive financial ramifications that crypto legislation could have on Ukraine’s economy, suggesting that swift action could enhance international trust in the nation:
In a time of conflict, it’s essential to leverage every opportunity and explore new economic avenues. Legalizing the crypto sector can result in substantial economic benefits, potentially generating billions in turnover.
Additionally, it is important to mention that since the beginning of the Russian invasion in February 2022, Ukraine has seen considerable support from international donors through cryptocurrency contributions, with notable figures like Vitalik Buterin and Justin Sun donating substantial amounts of digital currencies.
