New “State Policy” from Ukraine Will Legalize Cryptocurrency-Related Activities
According to a report on October 26th from Ukraine-based news agency Ukrinform, the ability to use cryptocurrency in the country is finally becoming a reality. The Economic Development and Trade ministry of Ukraine has officially launched a “state policy” that will determine the classification and will legalize any activity relating to cryptocurrency.
The official press release from the Ministry said that the point of this legalization is to “create understandable conditions for conducting activities in the field of virtual assets and virtual currencies,” while also introducing “adoption of the concept of a state policy” for cryptocurrency.
Right now, the Ministry has already requested certain definitions for some of the most common terms in cryptocurrency, like “virtual currency,” “virtual assets,” “initial coin (or token) offerings” (ICO), “mining,” “smart contracts,” and “tokens.”
The report indicates that there are two stages to bring in these changes. By the end of 2019, the first stage of market analyzation to learn more about the trends and any issues that they need to prepare for. Based on the documents available, the second stage would happen in 2020 and 2021, as they recognize the wallet providers and platforms in the industry as “subjects of primary financial monitoring.” Traditional financial institutions are usually the ones with this type of status. Everything should be in place by 2021.
Before now, there have been no regulations for cryptocurrency in Ukraine. However, the first sign that they intended to do so happened in May. Alexei Mushak, a member of the parliament, used his public Facebook page to post an alleged draft registration document for cryptocurrency. The document described a “free and transparent” market for digital assets, along with the rules that would govern their storage and use at every level for every type of crypto asset.
In September, the parliament brought in an official draft bill that would require that a 5% tax be paid on both individual and entity crypto holdings, if it is approved. The income tax rate for corporate and individual filings would be 18%.
There is an alternate bill in the works as well, which would host crypto tax exemptions and would define crypto asst in a different way. This bill was proposed by a Ukrainian legislator in October. By the middle of this month, the Ministry of Finance had already established a working group that specifically is working on taxation framework for cryptocurrency.
Along with their efforts toward legislation, the National Bank of Ukraine (NBU) is toying with the idea of having a state digital currency that is linked directly with their fiat currency – the hryvnia. The new digital currency would stay under government control.