Ukraine wants to become a top crypto jurisdiction, unlike the Wild West. We are constructing a high-tech state in Ukraine by simultaneously acting as an experimenter, regulator, and booster. Ukraine is the first country in the world to have digital passports that can be seen on a smartphone. It is also the fourth country in Europe to have digital driving licenses. We offer the fastest business registration in the world—two seconds.
Ukraine has used a paperless system since September 2021. The term “paperless” refers to the fact that government officials will not be able to demand paper papers from Ukrainians. In the next 50 years, we want to create the most comfortable and user-friendly country on the planet.
We’re also creating a top jurisdiction for crypto and blockchain startups to help develop the emerging digital economy. Ukraine made another significant step forward this month by extending legal status to virtual assets. In September, the Ukrainian parliament enacted a bill making cryptocurrency and other virtual assets legal. We became one of the first countries in the world to take a complete approach to developing a high-quality regulatory framework. It is also for the virtual asset market, which includes the development of state infrastructure.
Ukrainians are Tech-Savvy
Technologically, Ukrainians sophisticated. We’re in the top five countries in the world when it comes to cashless payments. There is a sizable blockchain developer community in the United States. Bitfury, Hacken, and Propy are just a few of the startups started by Ukrainians. From 2017 to 2019, $171.4 million was invested in Ukrainian crypto businesses. Ukraine leads the world in crypto adoption, so our population is already familiar with the technology.
Even on a global scale, the virtual asset market in Ukraine wants a substantial turnover. But the majority of it focused on a murky area. This poses a risk to all parties involved: the government, corporations, and users.
While some businesses are unwilling to work legally and contribute to the country’s economy. Others interested in structuring and capitalizing their operations, extending their “real” sector activity. And integrating with the banking system. As a result, market regulation and licensing of company procedures became necessary.
Digitalization in Ukraine
However, in Ukraine, digitalization has proven to be a successful instrument in the fight against corruption. Bribes aren’t accept by the computer, after all. The state budget can save billions of hryvnias through digitizing services. The law governing virtual assets incorporates FATF guidelines on money laundering. This includes crime, terrorist financing, and proliferation prevention. Strengthening legislation will help us keep our reputation as a good place to do business with cryptocurrency.
The law develops a permission system and addresses financial oversight difficulties by defining basic ideas. Determining the types of service providers, and establishing a permit system. It’s vital to highlight that our rules are technology-agnostic and solely concerned with regulating commercial relations. As a technology, we do not govern cryptocurrencies and tokens. Virtual asset service providers are the target of the regulations (VASPs).
We want to encourage crypto firms to register Ukraine wants to provide them with exceptional tax planning opportunities. The exception is Russian Federation businesses, which will be unable to operate lawfully in Ukraine. As a result of the seizure of Crimea. In terms of taxes on operations involving virtual assets in Ukraine, the most likely situation is a VAT exemption.
The only question that remains now is who should serve as the new domain’s primary regulator. On October 5, Ukraine’s President, Volodymyr Zelensky, returned the bill on virtual assets to Parliament. Along with his recommendations for reforming market regulators.
More Effectively Function as the Main Crypto Regulator
It’s still being debated whether the Ministry of Digital Transformation should take on all regulatory obligations. Or whether the National Commission on Securities and Stock Markets would a better fit as the primary crypto regulator.
The law will be set for another hearing after the president’s proposals are submitted. It should take a few months to complete this process. Ukrainian crypto firms will also be able to work formally with the financial system with future regulation. Which scheduled for 2022.
The National Bank of Ukraine has the potential to have a significant impact on the virtual asset market. It may issue its own digital currency. Which would aid in attracting investment and maintaining the banking system’s stability.
As we adjust regulations to the realities of the crypto business. We are taking a balanced approach to addressing risks and opportunities. We hope to attract IT businesses, large crypto exchanges, hedge funds, and institutional investors. All of whom require order and a controlled environment in which to operate.