The legal status of cryptocurrencies remains a mixed bag of regulatory positions, depending on the jurisdiction being considered. While some countr
The legal status of cryptocurrencies remains a mixed bag of regulatory positions, depending on the jurisdiction being considered. While some countries move toward blanket prohibitions or stringent regulations, others elect to go with a more open approach to crypto.
For Ukraine, the latter path appears to be the case, with the government encouraging legalized crypto operations within the country. Ukraine’s seemingly positive stance on cryptocurrencies also stands in stark contrast with neighboring Russia where officials are enacting regulatory roadblocks against the ownership and use of digital currencies.
While Ukraine enacts laws to recognize and regulate crypto, the country’s central bank is also working on its own national digital currency. Central bank digital currency (CBDC) projects have become quite popular across the globe, often as a response to the proliferation of cryptocurrencies.
Some countries such as China and Nigeria with CBDC plans have been known to pass anti-crypto regulations. Global financial organizations like the Bank for International Settlements have also clamored for nations to use CBDCs to suppress the spread of “private” cryptocurrencies.
Draft law on virtual assets
Earlier in September, Cointelegraph reported that the Ukrainian Parliament adopted the draft law “On Virtual Assets.” The legislative action meant official recognition of cryptocurrency in the country.
According to a release by Ukraine’s Ministry of Digital Transformation on Sept. 8, the draft law passed by the legislature was based on the crypto regulatory standards set by the Financial Action Task Force (FATF). As such, the guidelines contained in the new regulations mandate compliance with Anti-Money Laundering protocols.
Commenting on the passage of the draft bill, Oleksandr Bornyakov, deputy minister of the Ministry of Digital Transformation Ukraine, told Cointelegraph that government regulation was a necessary step in the growth and maturity of any emerging industry, adding:
“Establishing a virtual assets policy in Ukraine will enable the creation of a legal space for Ukrainian and international VASPs to officially register their businesses. This is also relevant in view of the fact that Ukraine’s potential as one of the leading countries in the field of virtual assets is huge. So, there is a clear need for crypto adoption in Ukraine.”
Bornyakov’s ministry will be tasked with implementing the crypto regulatory policies across Ukraine. The Ministry of Digital Transformation will also help to monitor the circulation of cryptocurrencies within the country in collaboration with the central bank.
In a conversation with Cointelegraph, Lucia della Ventura, legal and compliance manager at treasury technology specialist Ledgermatic, commented on the legalization of crypto in Ukraine, stating, “The main purpose of the Ukraine bill is to provide a secure space for the introduction of Bitcoin and other cryptocurrencies in the country, which have a legal definition now, with rules that determine their use.”
According to della Ventura, passing the bill will offer legal certainty for crypto companies in Ukraine, adding:
“With parliament’s green light for this law, individuals and companies are adequately protected as the bill provides more clarifications on financial aspects and officially allows cryptocurrency companies to operate within the country.”
Legalized crypto trading in Ukraine
With the passage of the draft law in only its second reading, lawmakers in Ukraine have effectively kickstarted the legalization of the country’s crypto market, which had previously existed within a regulatory “gray area.” By recognizing cryptocurrencies, exchanges and other virtual asset service providers (VASP) can now establish banking relationships with commercial banks in Ukraine.
Access to banking services could incentivize foreign crypto businesses to set up shop in Ukraine, a situation that Mykhailo Fedorov, vice prime minister of Ukraine and head of the Ministry of Digital Transformation, said could help transform the country into a hub for cryptocurrency and blockchain technology.
“Soon, foreign and Ukrainian services related to the circulation of virtual assets, in particular, crypto exchanges, will be able to officially operate in our jurisdiction,” the Digital Transformation announcement stated.
According to Bornyakov, banks interacting with crypto businesses will open up new opportunities for the Ukrainian people, especially in the digital finance sector. As quoted in the Sept. 8 announcement, the deputy minister of Ukraine’s Ministry of Digital Transformation stated that the legalization of crypto will serve as a “powerful incentive” for further develop the country’s cryptocurrency space.
“We believe that the virtual assets market can jumpstart a digital economy in Ukraine,” Bornyakov told Cointelegraph, adding:
“The Ukrainian virtual asset market is already quite well-developed and…
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