Ukraine Passes the Law to Regulate Virtual Assets With Nearly Unanimous Vote

This is a step in the direction of Ukraine’s plan to open a cryptocurrency market to businesses and investors by 2022.

The Ukrainian Parliament passed a law this week that legalizes and regulates virtual assets in the country.

The bill was drafted in 2020 and was passed on Sept. 8 with support from 276 lawmakers, while only six were against the legalization of bitcoin and cryptocurrencies.

For the first time, the bill also provides clarity on digital wallets and private keys in Ukraine.

With this bill, the country aims to provide clarification on this asset class and protect those who own them. While crypto-assets were previously illegal in the country and citizens could buy and sell them, the law enforcement agencies treated the virtual assets as a scam. They conducted raids, often confiscating expensive equipment.

Just last month, the Security Service of Ukraine (SBU) blocked a network of what it called “clandestine cryptocurrency exchanges” running in Kyiv and claimed that these exchanges were facilitating money laundering and providing transaction anonymity.

But the law will allow crypto businesses to work officially in the country. To register a crypto business, a company is needed to prove that it is transparent and has an excellent reputation.

‘It will reduce stereotypical attitudes towards cryptocurrencies and will help them to become normal financial instruments,” said Oleg Kurchenko, CEO of virtual asset exchange platform Binaryx.

While Ukraine’s Ministry of Digital Transformation, the National Bank, and the National Securities Commission are the main regulator of the virtual asset market, as per the law, the government wants to have another regulator to issue permits to crypto companies.

If signed by President Volodymyr Zelensky, where it is now headed, the law will protect the crypto owners and exchange platforms from fraud and determine how it will regulate the cryptocurrency market in the future, according to the local publication.

The country further plans to open a crypto market for investors and businesses by next year, a spokesperson of the Ministry of Digital Transformation told the Kyiv Post. Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation, himself has said previously that the country was modernizing its payment market so that its central bank would be able to issue digital currency.

On an official state visit to the U.S. in August, President Zelensky also spoke of Ukraine’s budding “legal innovative market for virtual assets” as a selling point for investment.

But this would first require the parliament to pass the laws and amend the Tax Code and the Civil Code. Jeremy Rubin, CEO of bitcoin R&D lab Judica said,

“Ukraine’s improved legal status for bitcoin is a laudable symbolic measure that we progress towards a world that respects individual rights universally.”

“But it is only symbolic — bitcoin seeks neither permission nor forgiveness in its mission to protect persecuted communities from unjust governments.”

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