(Ukraine) The regulatory status of cryptocurrencies remains a mixed mix of regulatory positions, depending on the jurisdiction under consideration. While some countries are adopting strict bans or regulations, others are taking a more open approach to cryptocurrencies.
For Ukraine, the second way seems to be the case, with the government promoting legalized crypto activities in the country. Ukraine’s seemingly positive stance on cryptocurrencies is also in stark contrast to neighboring Russia, where officials are putting regulatory barriers in place against the possession and use of digital currencies.
While Ukraine has passed laws to recognize and regulate cryptocurrencies, the country’s central bank is also working on its own national digital currency. Digital Central Bank Projects (CBDC) have become hugely popular around the world, often in response to the rise of cryptocurrencies.
Some countries like China and Nigeria are known to have implemented anti-crypto regulations with CBDC plans. Global financial institutions such as the Bank for International Settlements have also urged countries to use CBDCs to prevent the spread of “private” cryptocurrencies.
In early September, Cointelegraph reported that the Ukrainian parliament had passed the “On Virtual Assets” bill. Legislative action means the official recognition of cryptocurrencies in the country.
According to the September 8 release by the Ministry of Digital Transformation of Ukraine, the bill passed by the legislature is based on the Financial Action Task Force (FATF) crypto regulatory standards. Therefore, the guidelines of the new regulation require compliance with the anti-money laundering protocols.
Oleksandr Bornyakov, Ukraine’s Deputy Minister for Digital Transformation, commented on the passing of the bill to Cointelegraph that state regulation is a necessary step in the development and maturation of any industry.
“The introduction of a virtual property policy in Ukraine will allow the creation of a legal space for Ukrainian and international VASPs to officially register their business activities. This is also in line with the fact that Ukraine’s potential as one of the leading countries in the virtual asset space is enormous. So there is a clear need for the adoption of crypto in Ukraine. “
Bornyakov’s Ministry is tasked with implementing crypto regulatory policies across Ukraine. The digital converter will also help to monitor the circulation of cryptocurrencies in the country in cooperation with the central bank.
Speaking to Cointelegraph, Lucia della Ventura, Chief Legal and Compliance Officer at treasury technology specialist Ledgermatic, commented on the legalization of cryptocurrencies in Ukraine: Bitcoin and other cryptocurrencies in the country now have a legal definition with rules defining their use. “
According to della Ventura, the passage of the bill will bring legal certainty to crypto companies in Ukraine, adding:
“With the green light from Congress to this legislation, individuals and businesses are fully protected as the bill better explains the financial aspects and officially allows cryptocurrency companies to operate in the country.”
With the passing of the draft law in only second reading, the legislature in Ukraine has effectively started to legalize the country’s cryptocurrency market, which previously existed in a “regional gray” as prescribed. With the recognition of cryptocurrencies, exchanges and other Virtual Asset Service Providers (VASPs) can now establish banking relationships with commercial banks in Ukraine.
Access to banking services could encourage foreign crypto companies to settle in Ukraine, a situation suggested by Mykhailo Fedorov, Deputy Prime Minister of Ukraine and Head of the Ministry of Digital Transformation, using blockchain technology.
“Soon, foreign and Ukrainian services related to the circulation of virtual assets, especially cryptocurrency exchanges, will be officially operating in our jurisdiction,” read the digital transformation announcement.
According to Bornyakov, banks that interact with crypto companies will open new opportunities for Ukrainians, especially in the field of digital finance. As quoted in the September 8 announcement, Ukraine’s Deputy Minister for Digital Transformation stated that the legalization of cryptocurrencies will be a “strong impetus” for the further development of the crypto space.
“We believe the virtual asset market can boost the digital economy in Ukraine,” Bornyakov told Cointelegraph, adding:
“The Ukrainian virtual asset market is inherently quite developed and even large on a global scale. The development of the virtual asset industry is one of the top priorities of the Ukrainian government. Therefore, we strive to create a really favorable legal and tax framework for conducting crypto business in Ukraine. “
Foreign crypto exchanges legally operating in Ukraine can also be a positive driver in attracting foreign investment into the country’s digital economy. With stricter regulatory guidelines emerging in some jurisdictions, Ukraine’s recognition of digital assets could spur crypto companies to relocate to the country.
Related: The Ukrainian State Security closes illegal crypto exchanges
VASPs wishing to establish a presence in Ukraine under the new regulatory model are expected to provide information on their ownership structure. In fact, only owners with a “perfect business reputation” are allowed to run crypto-based companies in the country.
In August, the Ukrainian security service shut down a secret network of cryptocurrency exchanges that are believed to have been involved in illegal financial activity since early 2021. These platforms are designed to fund funds from banned Russian payment processors like Yandex, WebMoney, and Qiwi. to take .
The Ukrainian authorities also expect these VASPs to draw up internal financial oversight protocols to ensure compliance with anti-money laundering guidelines. The central bank is also committed to promoting fair regulation of cryptocurrencies in the country.
In an official statement from the National Bank of Ukraine (NBU), the country’s central bank outlined its plans to focus on cryptocurrency regulations. In the context of the document, the NBU recognized the promising opportunities that cryptocurrencies offer, especially in the payment market.
With Congress recognizing cryptocurrencies, the NBU said it would monitor the risks associated with the rapid rise of digital currencies in the country, with a particular focus on stablecoins. In fact, stablecoins have come under government scrutiny in many countries, including the United States.
Government attitudes towards Bitcoin (BTC) and crypto in general seem to be turning towards absoluteness – for or against – with nuanced positions threatened with extinction as far as actors are concerned. While it doesn’t fall into the same category as El Salvador’s Bitcoin law, the legalization of cryptocurrencies in Ukraine has placed the country in a small group of countries that have passed laws promoting the introduction of digital currencies within its world.
With the Ukrainian central bank also reportedly planning to issue a CBDC, the move to legalize cryptocurrencies represents a departure from the regulatory path taken by other countries with existing projects. While China has long had strict crypto control policies in place and banned token trading and fundraising in 2017, Beijing appears to have stepped up its crackdown on cryptocurrencies as the project multiplied. Your digital currency started entering public beta.
The People’s Bank of China (PBoC) has repeatedly stated that their digital currency crypto payments project is a direct response to privately issued cryptocurrencies. In fact, the PBoC has joined the chorus of central bankers who have warned of the potential of the Facebook-sponsored Diem project to more consciously change the protocols used to control monetary policy.
Regulations related to intermediary cryptocurrencies seem to be disappearing quickly, with countries falling into one of two extreme categories when it comes to dealing with cryptocurrencies. El Salvador’s introduction of Bitcoin as legal tender has been touted as an inspiration for other countries in Central and South America to follow a similar approach.
In early September, the Cuban cryptocurrency regulations enacted by the country’s central bank came into force. As a result, cryptocurrencies can now be used for investments and commercial transactions in Cuba, with exchanges and other VASPs adopting the new licensing regime.
Related: The Ukrainian ministry is considering testing a digital currency to pay employees
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