Ukraine, which is at war with Russia, has decided to establish a legal framework through which cryptocurrencies can be operated in the country in a regulated ecosystem. The country’s parliament had in February passed the law to legalise cryptocurrencies, and its President Volodymyr Zelenskyy signed it into a law Wednesday.
What is Ukraine’s new law on cryptocurrencies?
According to CoinDesk, the new Ukrainian law on cryptocurrencies determines the legal status, classification, ownership and regulators of virtual assets, in addition to establishing registration requirements for cryptocurrency service providers. In a tweet, Ukraine’s digital ministry said: “From now on, foreign and Ukrainian cryptocurrencies exchanges will operate legally and banks will open accounts for crypto companies. It is an important step towards the development of the VA (virtual assets) market in Ukraine”.
Ukraine has legalized the crypto sector — @ZelenskyyUa signed a law. From now on foreign and Ukrainian cryptocurrencies exchanges will operate legally and banks will open accounts for crypto companies. It is an important step towards the development of the VA market in Ukraine. pic.twitter.com/lqqO1J9r1k
— Міністерство цифрової трансформації України (@mintsyfra) March 16, 2022
How will cryptocurrencies be regulated in Ukraine?
The cryptocurrency market in Ukraine will be regulated by its National Securities and Stock Market Commission — the equivalent of India’s Sebi. The Ukrainian securities regulator will also have powers, under the new law, to determine policies on digital assets, issue licenses to businesses dealing with cryptocurrencies, and act as a financial watchdog.
Why has Ukraine legalised cryptocurrency?
Ukrainians have been one of the most active retail users of cryptocurrencies, and there had been discussions in the country earlier to legalise these digital assets, but the latest trigger has been Russia’s military action in Ukraine. In light of the war, Ukraine has reportedly received more than $100 million in donations in the form of cryptocurrencies since the crisis began last month.
A report by TechCrunch said that with the new law in place, Ukraine’s first crypto exchange, Kuna, will no longer be limited to helping the country spend the donations directly with crypto-friendly suppliers, but help convert crypto to much-needed fiat. It added that the country has also partnered with the Bahamas-based exchange FTX to convert crypto contributions to Ukraine’s war effort into fiat for deposit at the National Bank of Ukraine.
Incidentally, an earlier law to legalise cryptocurrencies was passed by Ukrainian parliament back in September as well, but was vetoed by Zelenskyy saying the country couldn’t afford a new regulatory body.
What are the global experiences in legalising cryptocurrencies?
The most significant example of legally adopting crypto into a nation’s economy has been that of El Salvador, which made Bitcoin a legal tender in September 2021. But the initiative has since been marred with problems such as technical glitches and identity fraud, in addition to a conflict between the decentralised nature of Bitcoin and an authoritarian government in El Salvador.
Other than the Central American country, several other jurisdictions are attempting to legalise private cryptocurrencies, like Bitcoin and Ethereum, or are launching Central Bank Digital Currencies (CBDC) that are digital currencies backed by the state.
Where does India stand on cryptocurrencies?
In the Union Budget for 2022-23 presented last month, the Centre proposed a 30 per cent tax on virtual assets, including cryptocurrencies, effectively legitimising trading of private cryptocurrencies and non-fungible tokens. This was broadly in line with the Centre’s plans to have a fiat digital currency, while disallowing use of private virtual coins as legal tender.
The government is also separately working on a law to regulate private cryptocurrencies, while the Reserve Bank of India is planning to launch the pilot of its CBDC — the Digital Rupee — this year.
Like many other jurisdictions, India is also faced with the question of who would regulate cryptocurrencies in the country — the central bank, the securities watchdog, or a new regulatory body.
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Explained: What is Ukraine’s new law on cryptocurrencies? - The Indian Express
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