On September 8, local time, the Ukrainian Parliament passed a 276:6 absolute majority of votes to pass a draft law to legalize and supervise cryptocurrencies and other virtual assets.
The bill was launched in 2020 and submitted to the President of Ukraine, Volodymyr Zelensky for signature. Suppose the President agrees that this bill becomes law. In that case, the new law will protect the owners of virtual assets and trading platforms from fraud and the future direction of the local encryption market supervision plan.
Ukraine is a country that has put cryptocurrency into law in recent weeks. Ukraine also plans to open the cryptocurrency market to companies and investors by 2022.
Allow companies to register to engage in crypto-asset business
For a long time, the Ukrainian cryptocurrency market has been in a legal gray area. Local individuals usually conduct cryptocurrency transactions, but law enforcement agencies often closely watch companies and exchanges engaged in cryptocurrency transactions.
According to the “Kyiv Post” report, Ukrainian regulators tend to take a tough stance on cryptocurrencies, treating them as “scams.” They will also carry out raids on cryptocurrency companies and “Often confiscate expensive equipment without any reason.” In August this year, the Ukrainian Security Service (SBU) seized a “secret cryptocurrency exchange” operating in Kyiv,
claiming that it facilitated money laundering.
The new legislation will allow companies engaged in crypto-asset businesses to work and pay taxes in Ukraine legally. If a company wants to register an encryption business in Ukraine, it needs to prove its transparency and a good reputation. The cost of getting permission to start a business is more than $3,100. To prevent money laundering and financial terrorism, companies engaged in crypto asset business must declare their activities to the Ukrainian government.
According to the law, the Ministry of Digital Transformation of Ukraine, the National Bank of Ukraine, and the National Securities and Stock Market Commission are the primary regulators of the virtual asset market. In addition, the Ukrainian government also hopes to create a particular regulatory agency to issue licenses for companies engaged in the crypto asset business.
Plans to open the crypto currency market to investors by 2022
Ukraine’s recent recognition of the legalization of cryptocurrency is only part of its broader plan to open the cryptocurrency market. According to reports, Ukraine plans to open the cryptocurrency market to companies and investors before 2022.
The Ukrainian government hopes that the new law will make the cryptocurrency market more transparent and attract more investment to the country. Ukrainian Minister of Digital Transformation Mykhailo Fedorov stated that cryptocurrency is very popular in Ukraine, and the daily transaction volume of virtual assets can reach 37,000 US dollars. Therefore, if cryptocurrency becomes legal and safer, more people will invest in cryptocurrency.
If approved by the President, the new legislation will provide owners of Bitcoin and other cryptocurrencies with protection against fraud. At the same time, terms such as virtual assets, digital wallets and private keys will also be written into Ukrainian law for the first time.
Although virtual assets are given legal status in Ukraine, they do not have the function of a means of payment and are not in the same status as Ukraine’s official currency (hryvnia). As a result, Ukrainians can only hold and trade cryptocurrencies through local or foreign exchange trading platforms registered in Ukraine.
Multi-country accelerates the deployment of cryptocurrencies
In addition to Ukraine, many countries have promoted cryptocurrency applications in their own countries on the legal level in recent weeks.
On September 7, El Salvador, a Central American country, became the first country to use Bitcoin as legal tender. According to the newly passed El Salvadorian Bitcoin law, Bitcoin will be used simultaneously as the U.S. dollar and can be used to mark prices and pay taxes. At the same time, there is no capital gains tax for transactions with Bitcoin. Approximately 70% of El Salvador’s citizens currently do not have access to traditional financial services. The government hopes that this measure can promote the country’s financial inclusiveness.
On August 26, Cuba, another Central American country, stated that the country’s central bank would introduce new cryptocurrency rules, and companies need to obtain permission from the central bank to provide cryptocurrency-related commercial services. The trade embargo imposed by the United States on Cuba in the past 60 years has been suppressing the country’s economy, and the adoption of cryptocurrency may help Cuba circumvent U.S. sanctions.
According to reports, the next country to write cryptocurrency into law will likely be another Central American country-Panama. The country is currently preparing a draft of its cryptocurrency law.