Digital assets may get legal status in Ukraine via new regulatory framework

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Ukraine’s Advisory Council on the Regulation of Virtual Assets says it is keen on making significant changes to the state of digital asset regulation in the country.

The Advisory Council, in a meeting held on December 1, stated their intention to introduce a new national virtual currency framework by amending the extant law, “On Virtual Assets.” The meeting was attended by high-ranking regulators from the National Bank of Ukraine and the executive arm of the government.

During the discussion, it was disclosed that the country would collaborate with international agencies like the USAID Financial Sector Reform project and Ernst & Young. Deputy Head of the Office of the President Rostylav Shurma informed attendees that “there should be maximum involvement of all parties in the process,” hinting that a public consultation could be launched in the coming weeks.

“The goal is simple – to make crypto circulation in Ukraine legal and safe, but according to the principle of ‘do no harm,’ so that the market receives not regulation, but incentives for development and competitive advantages,” said Yaroslav Zheleznyak, People’s Deputy of Ukraine.

 Zheleznyak confirmed that Ukraine’s parliament remains committed to supporting the burgeoning industry on the grounds that it could usher in economic gains.

Taxation of digital assets was a key area of discussion among attendees, with the consensus being an amendment of the existing Tax Code of Ukraine. The reason for the amendments is to bring the tax code in line with the ‘On Virtual Assets’ law.

The existing digital assets law was passed by President Volodymyr Zelensky in March, giving authority to both the National Securities and Stock Market Commission of Ukraine.

Ukraine leans heavily on digital assets

Digital asset adoption rose to new frenetic levels in 2022, largely fuelled by the conflict with Ukraine. As the conflict wore on, humanitarian efforts and support for the nation’s defense turned to digital assets to raise funds after conventional fundraising sites flagged down donations.

Within weeks, over $100 million had been donated to relief efforts in the war-torn country. Decentralized Autonomous Organization (DAO) UkraineDAO raised funds through the sale of non-fungible tokens (NFTs) as the nation scrambled to patch up a regulatory framework to guide the new asset class.

“With the ability to donate cryptocurrency, never before have you been able to see donations make such a difference,” said John Sarson, CEO of Sarson Funds. “Generals in Ukraine say that 40% of their suppliers are now accepting cryptocurrency directly.”

Ukraine currently ranks in third place in Chainalysis’ 2022 Global Crypto Index, with an impressive 15.72% of the population owning digital assets.

Watch: The BSV Global Blockchain Convention panel, The Future World with Blockchain