The parliament in Kiev passed a law setting the rules for crypto-related operations in Ukraine. The “On Virtual Assets” law recognizes cryptocurrencies as intangible goods, but denies them the status of legal tender. It also regulates the activities and obligations of crypto companies.
Ukraine legalizes crypto activities, defines virtual assets
The Ukrainian Verkhovna Rada, the country’s parliament, passed the law “On Virtual Assets” in the second and final reading. The legislation regulates the operation with cryptocurrencies in the Ukrainian jurisdiction. The MPs passed the bill with a large majority of 276 votes from 376 MPs present, with only six voting against the motion.
The long-awaited bill will come into effect after lawmakers approve changes to the country’s tax laws regarding the taxation of cryptocurrency transactions. The Ukrainian legislature has yet to vote on these changes, Forklog noted in his report on developments.
The provisions of the new law recognize virtual assets as intangible goods that can be secured and unsecured. However, cryptocurrencies are not accepted as legal tender in Ukraine and cannot be exchanged for other goods or services.
The law also introduces the term “financial virtual assets” that must be issued by companies registered in Ukraine. If these assets are backed by currencies, they are regulated by the National Bank of Ukraine (NBU), the country’s central bank. If the underlying is a security or a derivative, the National Securities and Stock Market Commission (NSSMC) is the primary regulatory authority.
Crypto market participants will be able to independently determine the value of virtual assets, open bank accounts to process transactions, and seek legal protection for related rights. Service providers are required to adhere to the country’s anti-money laundering regulations and prevent terrorist financing attempts through their platforms, just like traditional financial institutions.
The current Ukrainian authorities have maintained a positive stance on the country’s growing crypto industry, which was confirmed by representatives of the executive branch this week. During a visit to the US, President Volodymyr Zelensky highlighted the importance of establishing a legal market for digital assets, which he described as the “development vector” of the country’s digital economy. Ukraine’s Minister of Digital Transformation Mykhailo Fedorov added that the country was working to become an attractive jurisdiction for crypto businesses.
The draft law “On virtual assets” was voted on in the Rada last December at first reading. After a few changes, the legislature presented a revised version of the document in June of this year. Following criticism from various regulatory agencies, including the NBU and NSSMC, the draft law was again amended, with the authors taking into account the concerns of other government institutions.
Do you think Ukraine’s business climate for crypto companies will improve after the adoption of the Virtual Assets Act? Do share your expectations in the comments section below.
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