The current President of Ukraine, Volodymyr Zelenskiy, has signed a law to legalize cryptocurrency businesses on his territory.
Ukraine's Ministry of Digital Transformation has announced the legalization of cryptocurrency businesses in the country, following a law signed by current President Volodymyr Zelenskiy.
The new law “on virtual assets” will allow exchanges and cryptocurrency companies to operate legally on Ukrainian territory. Moreover, as reported by the Ministry of Digital Transformation, national banks have been authorized to open cryptocurrency accounts for service providers with these digital assets. The recent law signed by Zelenskiy was approved by the Verkhovna Rada of Ukraine in mid-February. With this law, the country takes an important step towards crypto adoption, although it is still unknown whether cryptocurrencies such as Bitcoin (BTC) y Ethereum (ETH), which the government has used to receive donations, will enjoy legal tender.
Analysts say Ukraine is likely to soon announce new agreements to boost crypto mining within its territory.
Just this week, the European nation, currently at war with Russia, launched a platform for fundraising in crypto assets. Since the end of February, the country has received more than $100 million in donations from the crypto community, to help its citizens overcome the current humanitarian crisis.
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Law on virtual assets of Ukraine
As reported by the Ministry, the new law on virtual assets approved by the President of Ukraine will create the necessary conditions for the crypto industry to develop legally. Although cryptocurrencies have played a central role in the war against Russia, they have not had legal status in the European country until now. The Minister of Digital Transformation, Alex Bornyakov, recently acknowledged that the country has been working on developing a legal framework for cryptocurrencies and crypto companies for more than two years. However, it is the current military conflict between Russia and Ukraine that has accelerated crypto regulation.
With the adoption of this new law, the classification and ownership of digital assets by citizens and residents of Ukraine is recognized, Indian the Ministry, which at the time of this edition has not published the legal document as such.
Virtual Asset Market Regulators
The National Bank of Ukraine and the National Securities and Markets Commission of the country will be the entities in charge of supervising the crypto industry. These bodies will issue licenses and permits to authorize virtual asset service providers in the country and will keep a register of domestic and foreign crypto companies and determine their registration conditions. According to the Ministry, the new law also provides for the application of financial monitoring measures in the field of crypto assets.
On the other hand, the Ministry of Digital Transformation revealed that the country has plans to launch a legal market for virtual assets. The Ministry of Finance of Ukraine is currently working to consolidate these plans, so it will soon submit proposals for amendments to the Tax Code and the Civil Code of Ukraine, in order to create a modern and attractive digital asset market infrastructure and “bringing the cryptocurrency sector out of the shadows”.
Blockchain and CBDC adoption
In July 2020, Zelenskiy announced Ukraine's plans to adopt technology blockchain and to promote digital development and transformation. At the time, the president’s adviser, Mikhail Fyodorov, said that the country’s plans were to develop a nation-state accessible to all its citizens, similar to a smartphone. Ukraine wants to integrate blockchain technology into state structures and even develop a blockchain-based voting system that would ensure transparency, efficiency and reliability.
As for the CBDC, digital currencies developed by central banks, Ukraine has been working on creating its own digital currency in collaboration with the Stellar Foundation, creator of the open-source Stellar blockchain. In early 2021, the country indicated that it would develop a complete digital infrastructure, allowing for the creation, issuance and management of its own digital currency. In the middle of last year, the country's National Bank indicated that it would focus on developing a retail CBDC for payments, following the interests expressed in the results from a survey applied to stakeholders.
In 2020, blockchain analytics firm Chainalysis classified Ukraine as the leading country in the adoption of cryptocurrencies as a global phenomenon, followed by Russia and Venezuela.
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