Key Highlights
- Timeline: Ukraine aims to legalize cryptocurrency in the first half of 2025.
- Legislative Process: The National Bank of Ukraine is finalizing the relevant bill in cooperation with the International Monetary Fund (IMF).
- Taxation Approach: Cryptocurrency transactions will be taxed similarly to securities, focusing on investment profits.
- European Integration: The new legislation aligns with the European Union's Markets in Crypto-Assets (MiCA) regulation.
Details
Daniil Getmantsev, Chairman of the Verkhovna Rada Committee on Finance, Tax, and Customs Policy, announced that Ukraine plans to legalize cryptocurrency by early 2025. The legislation is currently being finalized by the National Bank of Ukraine in collaboration with the International Monetary Fund (IMF).
"We will have a specific official position from IMF experts on this bill. I think that we can legalize cryptocurrency in the first or second quarter of next year," Getmantsev stated.
Taxation of Cryptocurrency
Getmantsev emphasized that there would be no special benefits for cryptocurrency. Instead, taxation will follow the model used for securities transactions, where investment profits are taxed.
"There will be regular taxation according to the model of taxation of securities transactions—when investment profits are taxed," he explained.
Background
In 2021, the Verkhovna Rada adopted Bill No. 3637 "On Virtual Assets", aiming to establish a legal framework for cryptocurrencies in Ukraine. However, the President vetoed the document and requested amendments. During the ongoing conflict, attempts to modify tax legislation were unsuccessful.
After the European Union approved the Markets in Crypto-Assets (MiCA) regulation, Ukrainian lawmakers resumed efforts to develop comprehensive cryptocurrency legislation aligned with European standards.
In June, the National Securities and Stock Market Commission (NSSMC) presented a draft bill on the taxation of crypto assets, incorporating provisions from European law. One of the main proposals included an 18% tax on profits from crypto market activities and a 1.5% military tax. It remains unclear whether Getmantsev was referring to this specific document or a new legislative initiative.
Implications
- Regulatory Clarity: Legalizing cryptocurrency will provide a clear framework for businesses and investors, fostering innovation and growth in the digital assets sector.
- Alignment with EU Standards: Harmonizing laws with the EU's MiCA regulation positions Ukraine for closer integration with European financial markets.
- Economic Benefits: Proper regulation and taxation could enhance government revenues and promote a more transparent financial environment.
Conclusion
Ukraine's move to legalize cryptocurrency by early 2025 represents a significant step toward modernizing its financial sector and aligning with international standards. The upcoming legislation is expected to provide clarity for market participants and contribute to the country's economic development.
