Ukraine Moves to Legalize and Tax Cryptocurrencies with New Bill

TLDR

• Ukraine’s parliament approved a bill to regulate and tax cryptocurrencies in the first reading.
• The bill includes an 18% tax on profits from virtual asset transactions.
• Investors who convert crypto to fiat within one year will benefit from a 5% tax rate.
• The National Bank of Ukraine will oversee the country’s crypto market regulation.
• A new regulatory body will be created to enforce crypto market oversight and compliance.

Ukraine’s lawmakers have voted to approve a bill that aims to regulate and tax cryptocurrencies. The legislation, titled “On Virtual Asset Markets,” received the first reading approval in the Verkhovna Rada. The move opens the door to legalized crypto investments and enhances state revenue. With 246 votes in favor, lawmakers are now one step closer to regulating virtual assets.

Ukraine Bill Proposes 18% Tax on Crypto Profits

The bill outlines provisions for the taxation of cryptocurrency transactions. According to the draft law, profits from virtual asset transactions will be taxed at 18%. The tax will be calculated based on the difference between sales revenues and acquisition costs. Investors who convert their crypto to fiat within a year of the law’s adoption will benefit from a preferential 5% tax rate. However, income derived from trading different virtual assets will remain untaxed.

The bill also details the responsibilities of the National Bank of Ukraine (NBU) in supervising the country’s crypto market. A second regulator is still to be determined. This new agency will have the power to conduct inspections and request information from both individuals and businesses. It will also have the authority to freeze assets and seize property if necessary.

Crypto Regulation Could Stabilize Ukraine’s War-Torn Economy

Ukraine’s decision to regulate cryptocurrency could boost its economy, particularly amid ongoing challenges. The country’s economy has suffered due to the war, with crypto usage increasing during the conflict. As cryptocurrencies gained popularity, Ukraine sought ways to regulate the market. This move is expected to address the growing issue of crypto-related crime.

A report from a leading U.K. think tank suggests Ukraine could recover up to $10 billion by regulating the crypto sector. The absence of proper regulation has left the country vulnerable to crypto-related crimes. Adequate legislation could result in increased tax revenue, benefiting Ukraine’s economy during these difficult times.

While the bill still requires amendments and further readings, this step is crucial for the future of the Ukrainian crypto market. Crypto adoption in Ukraine is among the highest in the world, as reported by Chainalysis. The Ukrainian government believes that proper crypto regulation could help stabilize the economy and attract more investment.

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