Legalization of the cryptocurrency market in Ukraine and regulation of related procedures

Monday, April 26, 2021
Legalization of the cryptocurrency market in Ukraine and regulation of related procedures

Ukraine brings to light the market whose daily value in Ukraine is about $ 20 million

The draft law "On Virtual Assets", created to legalize the market of crypto assets in Ukraine, is ready for the second reading already in a month. "We are creating a legal and favourable environment in Ukraine for the development of the virtual assets market. It is one of the new industries in which Ukraine can become a world leader. I hope that already next year crypto companies will be able to work legally in Ukraine for the first time", commented Mikhail Fedorov, Minister of Digital Transformation of Ukraine.

What does the bill do:

  • Names of market regulators: Ministry of Digital Transformation, National Bank of Ukraine and National Securities and Stock Market Commission
  • Creates the legal framework for the digital media market: classification, legal status, investing-in-ukraine/business-for-sale/buy-property/" rel="dofollow">property rights and other priority legal definitions
  • Adapts FATF digital asset market monitoring structures
  • Defines and controls digital asset service providers

"The Bill contains many important parameters, such as general industry regulation, fines, licensing, etc. Another draft law is also being prepared, which will deal with the tax aspect of regulation", commented Natalia Drick, Head of the association "Blockchain of Ukraine".

The association "Blockchain of Ukraine", created for the protection of rights and interests of users of cryptocurrency, is working on both documents. More important at this stage is the second document "about taxes", which deals directly with the regulation of monetary matters in the circulation of cryptocurrencies.

Since there is no process of reception-transfer, "Blockchain of Ukraine" plans to eliminate VAT, as well as to receive within 5 years a tax credit of 5% (instead of 18% as required by the current legislation).

There are two ways to regulate income:

  1. Conversion "Fiat - Crypt" the difference between entering and exiting a cryptocurrency is: "If you exchange $100 for an enchanted amount of cryptocurrency, and as a result, the "crypt" withdrew $110, the income tax will be charged to $10," explains Natalia Drick.
  2. Conversion "cryptocurrency - cryptocurrency" the tax will be based on the cheques of the trading grounds that conducted the transaction.

Legal persons will pay profit tax once in 3 or 6 months, natural persons once a year, and an individual scheme for POEs 5% of the volume.

The adoption of the law "On virtual assets" will regulate crypto-assets, add weight to Ukraine’s financial system in the international arena and simplify the process of conducting financial flows, as Ukrainian miners will acquire the status of tax agents. It is a well-known fact that many major players like EXMO and Wirex are active in Ukraine. And the adoption of two cryptocurrency laws will give a strong boost to the progress of the crypto industry in Ukraine and inject foreign investment into the rest of the country’s economy.

"More than 400 amendments have now been submitted to the second reading. Mintshire and I have already worked on them. The last consultation with the National Bank is underway. Because among virtual assets there are some that resemble money and need to regulate the amendments on these types of virtual assets," commented the co-author of the bill Alexey Gemeranetsky.

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