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As the market continues its massive rally, Ukrainian lawmakers are preparing to legalize crypto soon officially. Local reports revealed that the parliament is working on a draft law but is not considering tax exemptions for digital assets.
Ukraine Prepares To Legalize Crypto
During a “Domestic Investment Opportunities” forum, Danylo Hetmantsev, Head of the Ukrainian Parliament Committee for Finances, Tax and Customs Policy, revealed that Ukraine aims to legalize digital assets in the coming months.
Hetmantsev stated that the parliament’s working group is working alongside the National Bank and the International Monetary Fund (IMF) on a draft law to pass the legislation in early 2025, news media outlet Ukrainska Pravda reported:
If we’re talking about cryptocurrency, the [parliament’s] working group is finalizing a draft law for its first reading. I believe the text, developed in collaboration with the National Bank and the IMF, will be ready after the New Year. We aim to pass this law and legalize cryptocurrency in the [2025’s] first quarter.
The head of the Committee also noted that tax exemptions won’t be applied to digital assets. Instead, they plan to follow the model used for securities, meaning that 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 “On Virtual Assets” law in March 2022, setting in motion a legal framework for regulating the digital asset market in Ukraine. However, the law had not been implemented by early 2024, as it awaited the amendments to the country’s Tax Code.
This resulted in the loss of millions in potential tax revenue, as the absence of crypto-related regulations meant that exchanges had no legal obligations to pay the Ukrainian authorities taxes for the revenue obtained from digital assets.
In April, the IMF asked Ukraine to complete an update on its crypto legislation by the end of 2024. According to a Facebook post from Deputy Minister of Digital Transformation Oleksandr Bornyakov, the IMF noted that the lack of regulation of the new industry posed a threat to “price stability and efficiency of monetary transmission.”
Bornyakov noted that the Ministry of Digital Transformation’s team had stressed the need to introduce state regulation in the crypto asset market, pointing to the two draft laws already registered for consideration in the parliament.
Additionally, he highlighted that crypto legislation could have a positive financial impact on the country and boost Ukraine’s economic growth, emphasizing that prompt action would also strengthen international confidence in the country:
In times of war, we must use the full range of opportunities and develop new sectors of the economy. Legalization of the crypto sector can have a powerful economic effect, generating a turnover of billions of hryvnias.
It’s worth noting that Ukraine has received significant aid from the global community through crypto donations since Russia’s invasion started in February 2022, with figures like 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
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