In June 2018, Ukraine opened its doors to cryptocurrency mining, stating that mining companies could operate without a need for a license. That assertion came following the country’s realization a year earlier that promoting mining operations, as well as crypto itself, could enhance the domestic economy. It doesn’t look like lawmakers are going to back down from that position anytime soon, either.
A new government document released last Friday indicates that there won’t be any mining regulations introduced because the industry is already essentially governing itself through blockchain consensus policies and regulations. Instead, the government’s role should be one that is limited to the “formation and implementation of state policy in the field of digitization, digital economy, digital innovation, e-governance and e-democracy, development of information society; assuring the development of virtual assets, blockchain and tokenization, artificial intelligence.”
This doesn’t mean that the country is developing an “anything goes” policy toward crypto mining, either. On the contrary, there have already been incidents where authorities have intervened to ensure that operators don’t get carried away with their activity. However, the government document adds, “[The government remains] loyal to mining activities that form part of open decentralized networks. Mining does not require regulatory activity from governmental oversight bodies or other third-party regulations, this activity is regulated by the protocol itself and network members.”
To help facilitate a robust mining industry, the Ukraine ministry will “contribute to the development and market introduction” of distributed ledgers and support “any innovation using these digital technologies, even if they are partially unregulated and/or not defined by national law.”
Where the Ukraine government will almost certainly intervene more is on the subject of taxes. Several bills have already been introduced to set the standard crypto tax rates, including one that wanted to place a tax of 18% on businesses for their crypto profits and another, introduced last November, looking for a 5% tax on crypto earnings for the first five years after the implementation of the law.
By not regulating the crypto mining industry, Ukraine is convinced the activity will flourish, allowing the country to become more economically independent. However, at the same time, it will work to introduce regulations aligned with international guidelines for crypto transactions, and has set in motion a plan that would force all transactions above $1,200 to be registered and tracked with the goal of thwarting the use of crypto for money laundering or other illicit purposes. This is similar to the guideline established by the Financial Action Task Force, which calls for a threshold of $1,000.
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