Ukraine in a Rush to Legalize Cryptocurrencies Under Zelensky
October 12, 2019
The new administration in Kiev, headed by the young president Volodymyr Zelensky, has brought renewed interest in cryptocurrencies. Fresh energy is now being injected into efforts to legalize decentralized digital money and regulate related economic activities. New draft laws have been proposed or are under preparation to accommodate the nascent industry, from which the Ukrainian government expects increased budget revenues.
Ukraine’s Ministry of Digital Transformation plans to legalize cryptocurrencies such as bitcoin cash (BCH) and bitcoin core (BTC). Тhe initiative to accomplish this comes directly from its current head, Mikhail Fedorov, local media reported recently, quoting his deputy and IT entrepreneur Alexander Bornyakov. The ministry is already working on a new bill that should be ready by the end of the year and preparing amendments to the country’s tax code.
Bornyakov pointed out that although cryptocurrencies in Ukraine are not banned per se, they currently don’t have any official status. Their legalization is necessary in part to protect businesses dealing with coins from police searches, emphasized the 37-year-old entrepreneur from Odessa. President Zelensky, a former popular comedian and TV producer, is preparing to appoint a new governor of the province this week, 36-year-old crypto millionaire Maxim Kutsiy.
The new generation of politicians that took over power in Kiev after the last presidential and parliamentary elections, inherited a country facing numerous challenges. These include a depreciating hryvnia, and an unresolved military conflict in the East. Allowing the promising crypto industry to flourish will undoubtedly translate into increased budget receipts. Bornyakov and his colleagues think it’s time for these companies to come out of the grey sector.
Plans to Legalize Mining and Create Crypto Valley
People from all corners of the Ukrainian society are now involved in the efforts to create regulatory certainty for the crypto industry. Representatives of the Ministry of Digital Transformation, Ukraine’s parliament (Verkhovna Rada), the non-government Better Regulation Delivery Office (BRDO), industry organizations, and businesses gathered recently to adopt a dedicated program to do that. The meeting was organized by a parliamentary group called “Blockchain4Ukraine” which unites lawmakers from different political factions.
The document details certain steps that the government and private sector need to take to achieve the set goal. These include legalizing mining, attracting international crypto asset exchanges to Ukraine, and developing the legal terminology needed to regulate the sector. Adopting amendments to the existing law “On Public Ledgers,” implementing FATF standards regarding money laundering as well as the integration of blockchain technologies into government registries are also part of the strategy.
The new management of the National Bank of Ukraine supported these efforts. Mikhail Vidyakin, acting director of the central bank’s Reform Strategy Department, commented on Facebook that the legislation necessary to regulate the crypto industry should be adopted in the shortest possible time, Forklog reported. He believes authorities must “find the courage” to do that within six to nine months after the approval of the new strategy and noted that Malta’s experience proves this is possible.
Another draft law, proposed by the Blockchain Ukraine association envisages the creation of a crypto valley in the Eastern European country. A number of established local companies with regional importance, such as crypto exchanges Exmo and Kuna, can form its core as they already have millions of users. But even until that happens, the popularity of cryptocurrencies in the country is likely to continue to grow. According to a survey among internet savvy Ukrainians conducted last year, 13% of the respondents admitted they owned digital coins.
Do you think Ukraine will catch up with neighbors like Belarus in terms of adopting crypto-friendly regulations? Share your expectations about the future of cryptocurrencies in the country, and the region in general, in the comments section below.
Images courtesy of Shutterstock, Ministry of Digital Transformation.