Ukraine adopts a new law to legalize bitcoin and other cryptocurrencies

More governments recognize the value of cryptocurrencies such as bitcoin. Ukraine is the latest country to legalize crypto. El Salvador was the first country to legalize bitcoin this week. Cuba approved a law two weeks ago to regulate and recognize cryptocurrencies. It cited “reasons of socioeconomic interest”. Panama is currently drafting new regulations.

Related Reading | Panama To Recognize Bitcoin As Payment Alternative, Issues New Regulations

In a close vote, the Ukrainian Parliament passed a law to legalize crypto currency. Earlier last month, there were reports of a new cryptocurrency-related bill that would allow payments in cryptocurrencies. According to a local report, the bill was in preparation for the second reading.

On Wednesday however, the Ukrainian Parliament approved the draft law “On Virtual Assets”. This legal recognition of cryptocurrency in Ukraine is the first. The law will enter into force after lawmakers approve amendments to the country’s tax code about the taxation of cryptocurrency transactions. These changes are still being considered by the Ukrainian legislature.

This news comes after the Ukrainian President Volodymyr Zelensky signed the law on Payment Services, a related law. Officially, the law allowed Ukraine’s central banking to issue a digital currency called the digital hryvnia.

What The Law Says

Unlike El Salvador’s decision to accept bitcoin as legal tender in El Salvador, Ukraine’s crypto law states clearly that cryptocurrencies are not legal tender. It is a sign that the country is investing more in bitcoin.

The new law recognizes virtual assets both as secured and unsecure intangible goods. However, cryptocurrencies will not be accepted as legal payment methods and cannot be exchanged for goods or services.

Anastasia Bratko, Minister of Digital Transformation said that

“Ukrainians would also be able declare their income in virtual asset,” she added. She said that the law “guarantees the judicial protection of rights to virtual assets owners .”

The law requires that the term “Financial Virtual Assets” be issued by registered entities. Participants in the crypto market will be able independently to determine the value and open bank accounts to settle transactions. They can also seek judicial protection for any rights associated with them. As traditional financial institutions, service providers must adhere to the country’s anti money laundering regulations. They also need to prevent terrorist financing through their platforms.

History Of Crypto In Ukraine

The laws regarding crypto in Ukraine were at first somewhat unclear. Before the legislation, cryptocurrency trading in Ukraine was legal. It was not covered by any laws. Although locals were permitted to exchange and buy virtual currency, law enforcement often closely monitored companies and exchanges that dealt in crypto.

Two years ago, the Ministry of Digital Transformation in Ukraine was founded. It was very active in crypto. To jointly develop new crypto rules, it partnered with Binance. The Government’s online portal reported that the Ministry of Digital Transformation partnered with a crypto exchange, Currency.com, a Belarusian service that is allegedly the first regulated exchange in the Commonwealth of Independent States (CIS) region to provide support for cryptocurrencies, fiat, and tokenized assets.

Ukraine authorities have taken a tough stance against illegal crypto activities.

Total crypto market cap on TradingView.com

Total crypto market at $2. 13 Trillion | Source: Crypto Total Market Cap from TradingView.com

In August, the Security Service of Ukraine (SBU) blocked a network of “clandestine cryptocurrency exchanges” running in the capital city Kyiv. These exchanges, the SBU claimed, were used to facilitate money laundering and anonymity transactions.

Related Reading | Ukraine’s Security Service Closes Illegal Cryptocurrency Exchanges

The current authorities are positive about the country’s expanding crypto industry. By 2022, the country plans to open the cryptocurrency market to businesses and investors, according to this Kyiv Post.

On an official state visit to the U.S. last month, the President of Ukraine, Volodymyr Zelensky, called on top investors, venture capital funds to actively cooperate with Ukraine. As a selling point, he spoke of Ukraine’s “legal innovative market in virtual assets”. Mykhailo Fedorov (Minister of Digital Transformation) also stated that Ukraine was upgrading its payment market to allow it to issue digital currency.

Featured image from PYMNTS.com, Chart from TradingView.com

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