The Ukrainian Government Releases State Policy for Cryptocurrency Regulation

The cryptocurrency regulation trend continues, with Ukraine being the latest country to announce their effort of classifying and regulating digital currencies alongside related activities.

With this in mind, the Ukrainian Economic Development & Trade Ministry has reportedly launched a state policy that will “create understandable conditions for conducting activities in the field of virtual assets and virtual currencies". So far, the policy has attributed legal definitions to a number of crypto-related terms, such as Initial Coin Offerings, smart contracts, mining, virtual currency and virtual assets.

The ministry has stated that the policy will also attempt to create a domestic cryptocurrency market that is free and transparent. As such, the regulatory effort will focus on establishing rules for trading, using, and storing digital assets, applicable to the state, business entities, investors and individuals. Currently, we do not know whether the policy will also attempt to regulate blockchain technology, or give smart contracts legal power.

It is important to point out the fact that this autumn, regulatory efforts concerning crypto taxation also commenced. As such, in September, the Ukrainian Parliament published a draft bill meant to levy a 5% tax on crypto holdings belonging to either individuals or business entities. For those earning crypto-based profits, the bill proposed the standard income tax of 18%. In October, another draft bill was published, which proposed several tax exemptions for crypto users alongside key term definitions.

At this moment in time, the crypto taxation framework is still work in progress, being handled by a specialized group working for the Ministry of Finance.

According to a local news outlet, the regulatory framework concerning digital currencies will be implemented in two stages, and most likely completed sometime in 2021.

Ukraine hasn’t made a name for itself yet in the cryptocurrency and blockchain markets, but it’s believed the country holds good potential. Like several other states, there are reports indicating that the National Bank of Ukraine may be working on a central bank digital currency that would be backed by the country’s national fiat currency, and controlled by the government.