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Oleksandr Bornyakov, the deputy minister of Digital Transformation of Ukraine, says that Ukraine plans to build a top crypto jurisdiction. 

Ukraine is one of the biggest markets for the use of cryptocurrencies such as Bitcoin globally, and the country recently decided to regulate the market to make it even more integrated into society and control its use. The new law is by many seen as a win for cryptocurrencies, but it doesn’t mean that crypto can be used for paying for goods and services in Ukraine at this point. It only makes it legal for Ukrainian citizens to trade.

Oleksandr Bornyakov, the deputy minister of Digital Transformation of Ukraine, recently wrote in Fortune that more regulation is underway. 

“To boost the new digital economy, we are also building a top jurisdiction for crypto and blockchain companies. Last month, Ukraine took one more important step by granting legal status to virtual assets,” he pointed out, “The virtual assets market in Ukraine has a significant turnover, even on a global scale, but most of it is concentrated in a gray area. This creates potential risks for all players: the state, businesses, and users.”

“The legislation governing virtual assets has implemented FATF recommendations on the prevention of money laundering, crime, terrorist financing, and proliferation. Strengthening legislation will help maintain our reputation as a quality jurisdiction for crypto business,” Bornyakov wrote and added that a new bill defining clear concepts for trading, a permit system, and a strategy to address financial monitoring issues are on the way. 

Alex Bornyakov, deputy minister for digital transformation in Ukraine. Foto: Stefan Weichert

We would like to incentivize crypto companies to register their business in Ukraine by offering them excellent tax planning opportunities… On Oct. 5, Ukraine’s President Volodymyr Zelensky returned the bill On Virtual Assets to Parliament with his proposals regarding changing regulators of the market,” Bornyakov wrote and added that it might become possible for Ukrainian crypto companies to work in the banking system in 2022. 

Ukrainians earn a lot on Bitcoin

Ukrainenu recently wrote about how Ukrainian is one of the top earners globally on trading bitcoin. Ukrainian investors earned 400 million dollars on bitcoin in 2020, according to a survey done by Chainalysis from this year. That ranks Ukraine as number ten globally, even close to Russia ranking fifth with 600 million dollars in earnings, and the hope is that the new legislation will make it possible for the sector to grow even more. 

Kyiv Post suggests that Ukrainians are investing so much in bitcoin because of the different investment culture in Ukraine, where people are less inclined to buy stock or bonds. The top three countries in the world for trading crypto are the U.S., China, and Japan, where investors earned respectively 4.1 billion dollars, 1.1 billion dollars, and 0.9 billion dollars. Ukraine is ranking over countries such as the Netherlands, Canada, and Turkey. 

“The data suggests that Bitcoin has given investors in emerging markets access to a high-performing asset, the likes of which they may not have otherwise had access to. On the other side of the coin, it also suggests that countries attempting to limit cryptocurrency usage through harsh regulations are preventing their citizens from taking advantage of the opportunity,” writes Chainalysis in the report.

Ukraine has previously ranked first in the world, measuring the percentage of the population who use cryptocurrencies. Since then, the Ukrainian government has been trying to find a way to legitimize the sector and to make it possible to pay with cryptocurrencies in shops. The new bill passed earlier this year isn’t allowing the trading of cryptocurrencies doesn’t include using it in shops. The parliament will need to pass laws that will change the tax code and civil code to accompany cryptocurrencies. Only then will it be possible to trade with cryptocurrencies in shops and stores.