Ukraine plans to legalize cryptocurrencies in early 2025, but without tax breaks and, in addition, regulating these digital assets with standard tax rules and anti-money laundering measures, in collaboration with the National Bank and the IMF.
Head of the Tax Committee of the Ukrainian Parliament, Danill Getmantsev, spoke about the nation's plans to regulate cryptocurrencies and digital assets, amid the growing adoption of these crypto assets by its citizens.
However, according to Getmantsev's statements during the forum «Investment prospects in the country», from parliament, a bill to regulate cryptocurrencies is being developed in collaboration with the National Bank of Ukraine and the International Monetary Fund and, although it is expected to be ready for approval in the first quarter of 2025, this will not include tax exemptions for digital assets.
Getmantsev commented that cryptocurrencies will not receive special treatment in terms of regulation and taxation, meaning they will be subject to the same tax rules as traditional assets.
Despite the stated conditions under which cryptocurrencies will be regulated in the near future, Ukraine would be taking a fundamental step towards provide a clear legal basis for cryptoassets.
The legalization of cryptocurrencies in Ukraine represents a step towards modernizing the country’s financial system and could position it as a regulated hub for digital asset trading in Europe. By implementing a clear regulatory framework, the country seeks to avoid risks associated with a lack of regulation, such as tax evasion, money laundering, and financial instability, so this regulation can help protect Ukrainian investors and maintain the integrity of the financial market in general.
The regulatory framework for cryptocurrencies in Ukraine
The proposed legislation is primarily aimed at regulating cryptocurrency transactions, including specific measures to prevent money laundering. Getmantsev has stressed the need to take a cautious approach to tax incentives, given that the use of cryptocurrencies can facilitate tax evasion in traditional markets. Therefore, he indicated that Ukrainian authorities are seeking to establish a robust regulatory framework that will allow for effective oversight of the sector.
The move towards regulation is crucial as Ukraine has seen significant growth in cryptocurrency adoption, ranking second in Eastern Europe according to the Cryptocurrency Adoption Index Chainalysis. This interest has continued even in difficult times, with organizations and citizens alike using cryptocurrencies to support humanitarian initiatives and protect their assets in the face of economic uncertainty.
Taxes on crypto profits
One notable aspect of the new legislation is that no tax benefits will be offered for cryptocurrency transactions. Profits made through these transactions will be subject to capital gains taxes, which will apply when the digital assets are converted into fiat currency. This means that investors will need to be prepared to comply with standard tax regulations, similar to those applied to other traditional financial assets.
In addition, Getmantsev has declared This approach seeks to avoid tax incentives that could result in lower tax revenues and further complicate the country's economic situation. The implementation of clear taxes on cryptocurrency profits could also allow the Ukrainian government to increase its tax revenues and contribute to financial stability.
Comparison with Morocco: an emerging regulatory framework
As Ukraine moves towards legalizing cryptocurrencies, Morocco is also working on its own regulatory framework. The North African country has begun to establish a legal environment for cryptocurrencies, with the aim of fostering innovation and protecting consumers. The country’s initiative is part of a broader trend in the region, where several countries are recognizing the economic potential of digital assets.
Notably, Morocco is seeking to regulate cryptocurrencies to ensure investor safety and attract foreign investment in the technology sector. Like Ukraine, Morocco faces the challenge of balancing regulation with promoting economic growth. In this regard, the Ukrainian experience could offer valuable lessons on how to implement effective policies without stifling innovation.
In conclusion, the planned legalization of cryptocurrencies in Ukraine represents a significant step towards regulating the sector and improving financial stability in the country. As this legal framework develops, it will be critical to observe how tax and regulatory policies are implemented and their impact on the cryptocurrency ecosystem at the local level.
