In the second reading of the Virtual Assets Bill on September 8, Ukraine becomes the fifth country to legalize and regulate cryptocurrencies following the Ukrainian Parliament’s nearly unanimous decision. The bill was already underway in 2020 with a total of 276 lawmakers supporting the proposal and only six opposing it.
According to the Ukrainian draft bill, the law will only regulate ‘legal relations arising in connection with the turnover of virtual assets in Ukraine, defines the rights and obligations of participants in the virtual assets market, the principles of state policy in the field of virtual assets.’
The law aims to protect the owners of digital currencies and exchange platforms from fraud. Moreover, the approved bill will be crucial for Ukraine’s plans to open the crypto market for potential investors and business transactions in the near future.
‘In particular, the adoption of specialized legislation is going to stimulate the attraction of foreign exchanges to the Ukrainian market. It will become a powerful incentive for the further development of the crypto-sphere in Ukraine’, Deputy Minister Oleksander Bornyakov stated in a press release shared with Decrypt.
However, Ukraine will not follow in the footsteps of El Salvador in adopting Bitcoin as legal tender. The legislation does not aim to put Bitcoin on par with Ukraine’s national currency, the hryvnia, preventing Ukrainians from using cryptocurrencies as a means of payment.
Before the bill is signed, the crypto market in Ukraine has always been neither legal nor prohibited since there are no specific laws that define it.
In the past, Ukrainian law enforcement agencies have considered digital assets as another form of ‘scam’, conducting raids against crypto-related businesses without any solid evidence.
This has led crypto businesses to move abroad or conduct their operations in secret to avoid being caught by authorities. However, with the new legislation, there is hope that the groundless raids will be lessened.
According to the Minister of Digital Transformation Mykhailo Fedorov, the law will settle this concern. He further said, ‘Favorable conditions will allow companies to register in Ukraine, rather than abroad. The entrepreneurs will pay taxes to the budget, but will be protected by the state.’
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