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Ukraine Passes Law Regulating Cryptocurrencies

On September 8, the Ukrainian Parliament adopted legislation regulating cryptocurrency trading and investment. It adopted the “Draft Law On Virtual Assets,” legally recognizing cryptocurrencies in the country for the first time.

Now the decision lies in the hands of Ukraine’s President, Mr. Volodymyr Zelensky.

Cryptocurrencies in the country have for long survived in ambiguity. They were neither legal nor illegal because there were no laws or norms to regulate them.

Ukraine wishes to open up for cryptocurrency businesses and investors by 2022, a representative from the Ministry of Digital Transformation told the Kyiv Post.

The Provisions of the Law

This Law applies to legal relations arising in connection with the circulation of virtual assets in Ukraine, defines the rights and obligations of participants in the market of virtual assets, and the principles of state policy in the field of circulation of Virtual Assets.

It defines Virtual Assets as an intangible asset that exists object of civil circulation, has a value, and expressed a set of data in electronic form. A Virtual Asset can also certify property rights, in particular the right of claim on other objects of Civil Rights.

The National Securities and Stock Market Commission shall be the regulating body in the country.

“Crypto exchanges will have the right to provide Virtual Asset Exchange Services exclusively on other Virtual Assets or national currency (Hryvnia), and in cases determined by the National Bank of Ukraine – for other currency values.”

It means Ukrainians can own and trade cryptocurrencies using crypto exchange platforms registered in Ukraine. But they cannot use them as a medium for payment for goods or services.

It will allow businesses to operate officially and legally protect their crypto assets. Also, the investors will be able to pay taxes according to the provisions.

However, the journey is not over yet. The parliament has to pass a set of laws and amend the Tax Code and the Civil Code first. Only after these laws are amended, the crypto law shall come into force.

Views of the Lawmakers and the Parliamentary proceeds.

As per an official press release from the Ministry and Committee on Digital Transformation, 276 MPs voted in favor of the bill, which will allow for the legal possession and registration of crypto assets.

“The Virtual Asset market is an additional point for the growth of the digital economy in Ukraine. The legalization of Virtual Assets creates the preconditions for launching this innovative market in Ukraine. Soon foreign and Ukrainian providers of services related to the turnover of Virtual Assets, in particular, cryptocurrencies, will be able to officially operate in our jurisdiction. Development of the new industry will attract transparent investments and strengthen the image of our country as a high-tech state.”

Mykhailo Fedorov, Deputy Prime Minister and Minister of Digital Transformation

This law is based on current standards for regulating transactions with Virtual Assets of the international anti-money Laundering agency, the Financial Action Task Force (FATF).

As discussed above, some associated laws also have to be changed before this law is enacted. So, a series of legislations will complete the framework for the regulation of digital assets.

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