On Wednesday, September 8, Verkhovna Rada – the parliament of Ukraine – introduced a law legalizing the use of Bitcoin (BTC) and other cryptocurrencies. As per the official documentation, a total of 276 Ukrainian lawmakers voted in favor of the bill.
The use of cryptocurrencies in Ukraine has seen an uptick over the past several months. If the law gets signed by President Volodymyr Zelensky, it will protect digital asset owners along with crypto exchanges from illicit activities and fraud. Besides, it will also give a clear direction to other crypto firms operating in the country.
Speaking to the local news publication Kyiv Post, a spokesperson from Ukraine’s Ministry of Digital Transformation said that the government is also planning to open up the crypto market for businesses and investors by 2022.
However, the parliament will have to first introduce a set of laws amending the Tax Code and Civil Code first. The recently passed law treats cryptocurrencies as intangible assets expressed in the form of electronic data.
Virtual Currencies Not an Alternative to Hryvnia
Although the use of virtual currencies becomes legal, they don’t hold the status of official currencies and are thus not the replacement to the national currency, Hryvnia. The law only legalizes exchanging and trading digital assets through regulated exchanges in the country. The publication notes:
The law on virtual assets allows crypto businesses to work officially in Ukraine and pay taxes here. To register a crypto business, a company needs to prove that it is transparent and has an excellent reputation. The permission to start a business costs over $3,100. To prevent profit laundering and financial terrorism, crypto businesses have to declare their activity to the state.
Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation said that cryptocurrencies are hugely popular among the country’s citizens. He further added:
“Only a few countries in the world have legalized crypto assets — Germany, Luxembourg, Singapore. Ukraine will be one of them. Favorable conditions will allow companies to register in Ukraine, rather than abroad. The entrepreneurs will pay taxes to the budget, but will be protected by the state”.
The main regulatory bodies governing Ukraine’s crypto market will be Ukraine’s Ministry of Digital Transformation, the National Bank of Ukraine, and the National Securities Commission.