As the market continues its massive rally, Ukrainian lawmakers are preparing to officially legalize cryptocurrencies soon. Local reports revealed that parliament is working on a bill but is not considering tax exemptions for digital assets.
Ukraine prepares to legalize cryptocurrencies
During a forum on “Domestic Investment Opportunities,” Danylo Hetmantsev, head of the Committee on Finance, Taxes and Customs Policy of the Parliament of Ukraine, revealed that Ukraine aims to legalize digital assets in the coming months.
Hetmantsev stated that the parliamentary working group is working together with the National Bank and the International Monetary Fund (IMF) on a draft law to pass the legislation in early 2025, media outlet Ukrainska Pravda reported. reported:
If we talk about cryptocurrencies, the [parliament’s] The working group is finalizing a bill for its first reading. I believe that the text, prepared in collaboration with the National Bank and the IMF, will be ready after the New Year. Our goal is to pass this law and legalize cryptocurrencies in the [2025’s] first trimester.
The head of the Committee also noted that no tax exemptions will be applied to digital assets. Instead, they plan to follow the model used for securities, meaning profits will be taxed when the assets are converted into currency.
Hetmantsev also explained that they will take a “very cautious approach to using cryptocurrencies for tax exemptions” after consulting with the IMF and European experts, “as it could potentially facilitate tax evasion in traditional markets.”
Ukraine’s regulatory landscape
President Volodymyr Zelenskyy signed the law “On Virtual Assets” in March 2022, putting in place a legal framework to regulate the digital asset market in Ukraine. However, the law had not been implemented as of early 2024, as amendments to the country’s Tax Code were awaited.
This resulted in the loss of millions in potential tax revenue, as the absence of cryptocurrency-related regulations meant that exchanges had no legal obligations to pay taxes to the Ukrainian authorities on income earned from digital assets.
In April, the IMF asked Ukraine to complete an update to its cryptocurrency legislation by the end of 2024. According to a Facebook In a message from Deputy Minister of Digital Transformation, Oleksandr Bornyakov, the IMF noted that the lack of regulation of the new industry represented a threat to “price stability and the efficiency of monetary transmission.”
Bornyakov noted that the Ministry of Digital Transformation team had underlined the need to introduce state regulation in the cryptoasset market, pointing to the two bills already registered for consideration in parliament.
Furthermore, he highlighted that cryptocurrency legislation could have a positive financial impact on the country and boost Ukraine’s economic growth, emphasizing that quick action would also strengthen international confidence in the country:
In times of war, we must take advantage of the full range of opportunities and develop new sectors of the economy. The legalization of the crypto sector can have a powerful economic effect, generating a turnover of billions of hryvnias.
It is worth noting that Ukraine has received significant help from the global community through cryptocurrency donations since the invasion of Russia began in February 2022, with figures such as Vitalik Buterin and Justin Sun donating millions of digital assets.
Bitcoin is trading at $100,715 in the one-week chart. Source: BTCUSDT on TradingView
Featured image from Unsplash.com, chart from TradingView.com
