Ukraine legalizes the cryptocurrency industry

The current president of Ukraine, Volodymyr Zelenskiy, has signed a law to legalize cryptocurrency companies on his territory.

The Ukrainian Ministry of Digital Transformation announced the legalization of cryptocurrency companies in the country, following a law signed by current President Volodymyr Zelenskiy.

The new law “on virtual assets” will allow exchanges and cryptocurrency companies legally operate on Ukrainian territory. In addition, as reported by the Ministry of Digital Transformation, national banks have been authorized to open cryptocurrency accounts for service providers with these digital assets. The recent law signed by Zelenskiy was approved by the Verkhovna Rada of Ukraine in mid-February. With this law, the country takes an important step towards crypto adoption, although it is still unknown if cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH)which the government has used to receive donations, will enjoy legal tender.

Analysts note that Ukraine is likely to soon announce new deals to boost crypto mining within its territory.

Just this week, the European nation, currently at war with Russia, launched a platform for raising funds in crypto assets. Since the end of February, the country has received more than $100 million in donations from the crypto community, to help its citizens overcome the current humanitarian crisis.

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Law on virtual assets of Ukraine

As reported by the Ministry, the new law on virtual assets approved by the President of Ukraine will allow creating the necessary conditions for the crypto industry to develop legally. Although cryptocurrencies have played a central role in the war against Russia, until now they did not have a legal status in the European country. Digital Transformation Minister Alex Bornyakov recently acknowledged that the country had been working on developing a legal framework for cryptocurrencies and crypto businesses for more than two years. However, it is the current war between Russia and Ukraine that has accelerated crypto regulation.

With the approval of this new law, the classification and ownership of digital assets by citizens and residents of Ukraine is recognized, Indian the Ministry, which at the time of this edition has not published the law document as such.

Virtual asset market regulators

The National Bank of Ukraine together with the National Securities and Securities Markets Commission of the country will be the entities in charge of supervising the crypto industry. These agencies will issue licenses and permits to authorize virtual asset service providers in the country and will keep a registry of domestic and foreign crypto companies and determine their registration conditions. According to the Ministry, the new law also provides for the application of financial monitoring measures in the field of crypto assets.

On the other hand, the Ministry of Digital Transformation revealed that the country has plans to launch a legal market for virtual assets. The Ministry of Finance of Ukraine is currently working to consolidate these plans, therefore it will soon submit proposals for amendments to the Tax Code and the Civil Code of Ukraine, in order to create a modern and attractive digital asset market infrastructure and “bring the cryptocurrency sector out of the shadows”.

Blockchain and CBDC Adoption

In July 2020, Zelenskiy ad Ukraine’s plans to adopt the technology blockchain and drive development and digital transformation. At the time, the president’s adviser, Mikhail Fyodorov, said that the country’s plans were to develop a nation-state within the reach of all its citizens, similar to a smartphone. Ukraine wants to integrate blockchain technology into state structures and even develop a blockchain-based voting system that ensures transparency, efficiency and reliability.

As for the CBDC, digital currencies developed by central banks, Ukraine has been working on creating its own digital currency in collaboration with the Stellar Foundation, creator of the open source Stellar blockchain. At the beginning of 2021, the country indicated that it would develop a complete digital infrastructure, which allows the creation, issuance and management of its own digital currency. In the middle of last year, the country’s National Bank signaled that it would focus on developing a retail CBDC for payments, following the interests expressed in the results of a survey applied to interested parties.

In 2020, blockchain analytics firm Chainalysis classified Ukraine as the leading country in the adoption of cryptocurrencies as a global phenomenon, followed by Russia and Venezuela.

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