Cryptocurrency used to be in the dark, but the new rule makes trading legal, and virtual transactions will then be taxed and regulated.
The Ukrainian parliament yesterday approved bill No. 3637 about cryptocurrencies. The bill makes cryptocurrencies and other digital assets legal in the country, according to Interfax Ukraine. Minister of Digital Transformation Mykhailo Fedorov said that the daily turnover of virtual assets in Ukraine already stands at around 1 billion UAH but that everything is hiding in the shadows, which means that nobody pays any taxes on transactions.
“Thanks to the bill, this will be settled. Favorable conditions will be created that will allow companies to register in Ukraine and not abroad. The budget will receive taxes, and entrepreneurs feel protected. Only a few countries in the world have legalized crypto assets – Germany, Luxembourg, and Singapore. Ukraine will be one of them,” said Fedorov.
“Now virtual assets have become an object of civil rights, an object of civil circulation. However, there is a lot of work ahead. During the year, we must amend the Civil Code and, of course… the tax code, develop by-laws,” added the head of the parliamentary committee on finance, tax, and customs policy, Danylo Hetmantsev, according to Interfax Ukraine.
What does it mean?
The new law is 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 cryptos, but the Ukrainian currency hryvnia remains the legal currency.
The law needs to be signed by President Volodymyr Zelensky before becoming an official law, but if or when that happens, Ukraine will be ready to take the next steps. Kyiv Post has spoken to a spokesperson with the Ministry of Digital Transformation, who said that Ukraine plans to open the market of cryptocurrencies for businesses and investors in 2022.
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. Any cryptocurrency shop will from now on need to be transparent to authorities, and they have to pay a fee of $3,000 plus taxes. It will be up to the Ministry of Digital Transformation, the National Securities Commission, and the National Bank of Ukraine to enforce the law and provide permits to cryptocurrencies.
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 summer. That ranks Ukraine as number ten globally, even close to Russia ranking fifth with 600 million dollars in earnings.
The price of bitcoins was soaring in 2020, and it is benefiting the Ukrainian investors. 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 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 Ukrainian government also said that they are working on making their own cryptocurrency.