As the market continues its massive rally, Ukrainian lawmakers are preparing to officially legalize crypto soon. Local reports revealed that parliament is working on a bill 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 Finance, Tax and Customs Policy Committee of the Ukrainian Parliament, revealed that Ukraine intends to legalize digital assets in months to come.
Hetmantsev said the parliament’s working group was working alongside the National Bank and the International Monetary Fund (IMF) on a bill that is expected to be adopted in early 2025, Ukrainska Pravda news outlet reported:
If we talk about cryptocurrency, the (parliamentary) working group is finalizing a bill for its first reading. I believe that 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 first quarter (2025).
The head of the Committee also noted that tax exemptions will not apply to digital assets. Instead, they plan to follow the model used for securities, meaning profits will be taxed when assets are converted into currencies.
Hetmantsev also explained that they would take a “very cautious approach to the use of cryptocurrencies for tax exemption purposes” after consulting the IMF and European experts, “as this could potentially facilitate tax evasion in traditional markets.
Ukraine’s regulatory landscape
President Volodymyr Zelenskyy signed the law “On Virtual Assets” in March 2022, establishing a legal framework to regulate the digital asset market in Ukraine. However, the law had not been implemented as of early 2024, as it awaited changes to the country’s tax code.
This resulted in a loss of millions of dollars in potential tax revenue, as the lack of crypto regulation meant that exchanges had no legal obligation to pay taxes on income from digital assets to Ukrainian authorities.
In April, the IMF asked Ukraine to complete an update to its crypto legislation by the end of 2024. According to a Facebook post by 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 the efficiency of monetary transmission”.
Bornyakov noted that the Ministry of Digital Transformation team emphasized the need to introduce state regulation on the crypto asset market, highlighting the two draft laws already registered for consideration in Parliament.
Furthermore, he highlighted that crypto legislation could have a positive financial impact on the country and boost Ukraine’s economic growth, emphasizing that rapid action would also boost international confidence in the country:
In times of war, we must exploit 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 several billion hryvnias.
It is worth noting that Ukraine has received significant assistance from the global community in the form of cryptocurrency donations since the Russian invasion began 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
