Following the adoption of the crypto draft bill, Ukrainians will be able to legally hold, exchange, and spend cryptocurrencies such as Bitcoin (BTC), according to a government official.
In addition to allowing cryptocurrency payments, the Ukrainian Digital Transformation Ministry proposes lower crypto taxes as part of the new legislation aimed at attracting the industry to the country.
Developing a market for cryptocurrency services
According to Ukraine’s Deputy Minister of Digital Transformation Oleksandr Bornyakov, the new crypto draft law will make cryptocurrencies “a completely legal and common phenomenon for the government and society.”
The Ukrainian government, according to Bornyakov, does not want to “hinder the development of this new industry by over-regulation.” Bornyakov anticipates the development of an entirely new market for crypto services, with the new legislation allowing Ukrainians to legally exchange and declare their crypto holdings.
According to the draft, cryptocurrencies will not be recognized as a payment method, but the legislation will allow crypto payments through intermediary services that provide instant crypto-to-fiat conversions, according to the official.
The draft law, which will broaden the use of cryptocurrency, is being prepared for adoption in the second reading after being approved by the Ukrainian parliament in December.
In order for cryptocurrency to enter the country, the following conditions must be met:
To protect Ukrainian crypto users, service providers will be required to obtain a work permit in Ukraine, according to a draft law designed to allow foreign businesses to enter the country smoothly.
The legislation establishes a new regulatory body – the National Service for Regulation of Virtual Assets – for this purpose.
“This is a simpler procedure than licensing,” Bornyakov explained to Minfin, adding that the requirements for obtaining a permit will be simple.
“The main thing is to demonstrate that there is sufficient capital and that there are no people on the sanctions lists among the founders,” he said, explaining that companies will not be required to register a legal entity in Ukraine.
“We understand that the business with virtual assets is global, so if we set the conditions for registration in Ukraine, cryptocurrencies will simply not enter our country,” he concluded, adding that the list of requirements for obtaining a permit, including non-residents, is clearly defined in the bill’s text.
According to Bornyakov, the draft bill makes no mention of cryptocurrency mining because the Ministry considers it to be a “completely legal activity” that does not necessitate additional regulation.
“Work on the text of the bill on amendments to the Tax Code is still underway,” said Bornyakov, revealing a new proposal to reduce the rate for individuals to 5% from the current 19.5 percent.