Cryptocurrency exchanges in the Ukraine could be brought under the regulation of the central bank, according to new legislative proposals working their way through government.
The relevant bill was filed on October 6, and sets out a number of guidelines for the regulation of cryptocurrency exchanges, including taxation and other compliance requirements.
Crucially, the bill identifies cryptocurrencies as a type of property asset for the purposes of taxation, similar to the IRS approach in the US, which was first discussed back in 2014.
The bill also tackles cryptocurrency mining specifically, holding that earnings from mining rewards should be treated as income for tax purposes.
The new law follows on from suggestions from the National Bank of Ukraine back in August that they were looking into regulation for cryptocurrencies and associated services, at a time when countries worldwide are investigating the most effective ways of regulating and taxing these activities.
If the bill passes into domestic law, the bank will be tasked with drawing up specific guidelines for exchanges to operate under the new legal framework, as well as obliging the bank to ensure exchanges, other companies operating in the sector, and even government departments move towards legal compliance.
As the bill progresses through the Verkhovna Rada, Ukraine’s legislative function, there is the potential for amendment and changes to different aspects of the law, and time will tell how the final proposals will shape up. The Financial Policy and Banking Committee in particular are likely to propose changes to the law as it makes its way towards the statute books.
However, the bill at this stage provides a good idea of how the eventual regulation may look, at a time of increasing regulatory efforts around cryptocurrency exchanges and blockchain services worldwide.
ICOs, or initial coin offerings, are one such area, and recent months have seen governments and regulators in the US, China, Russia and elsewhere come up with their own distinct approaches to regulation.
In the US, the Securities and Exchange Commission said some ICOs were in fact securities, and mandated their compliance with existing securities and markets laws.
Meanwhile in China, and laterally Russia, the favoured approach has been a blanket ban, effectively limiting the scope for investment and innovation in ICOs and related services.
With cryptocurrency exchanges now the target of regulation in Ukraine, it remains to be seen whether other national regulators will follow suit, in bringing exchanges under the auspices of existing financial regulatory systems.