Cryptocurrency Legalization in Ukraine
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Loading... - Carlotta Laland
- 11 Feb 2025
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Ukraine is on the verge of legalizing cryptocurrencies, with potential legislation expected to be adopted as early as 2025. This development has generated significant interest among business representatives, government agencies, and citizens. Danylo Hetmantsev, Chairman of the Tax Committee of the Verkhovna Rada, indicated at the forum ‘Prospects for Domestic Investment’ on December 11, 2024, that there is a high likelihood of legislation being passed in the first quarter of 2025.
In September 2021, Ukraine adopted a basic law on virtual assets, but it has not yet come into force due to the lack of accompanying tax regulations. Since 2023, the Verkhovna Rada has been reviewing two draft laws aimed at establishing a clear regulatory framework for cryptocurrencies. The first, developed by the National Securities and Stock Market Commission (NSSMC), aligns closely with European standards and advocates for strict regulation. The second, proposed by the Ministry of Digital Transformation, offers a more flexible taxation model, suggesting a gradual increase in tax rates from 5% for the first three years to 18% thereafter. This approach aims to test the effectiveness of tax rules and adapt them to market needs.
The proposed taxation model focuses on taxing the difference between invested and withdrawn funds when converting cryptocurrencies into fiat currency, with suggested rates of 18% income tax and 1.5% military duty. Experts have raised concerns about the need to account for losses from transactions involving virtual assets to prevent double taxation.
A key discussion point is determining which entity will serve as the market regulator for cryptocurrencies. Candidates include the National Bank of Ukraine (NBU), the NSSMC, and potentially a new commission under the Ministry of Digital Transformation. The International Monetary Fund (IMF) has advised that a regulator should not be appointed until more detailed rules are established.
In summary, the legalization of cryptocurrencies in Ukraine is set to advance in 2025, with ongoing discussions about taxation and regulatory frameworks. While the government is not currently prepared to offer preferential terms to the industry, the proposed laws aim to create a transparent and structured environment for cryptocurrency operations. Stakeholders will be closely monitoring the legislative process and its implications for the future of digital assets in Ukraine.
