Ukraine's new "crypto-law" - What does it mean in practice?
Photo by Mohd Azrin via Unsplash
In the middle of March, the Ukrainian government has made a new law regarding cryptocurrencies. Interestingly enough, a more or less similar law was proposed and voted on in 2021, but Ukrainian president Volodymyr Zelensky vetoed it.
Legislation from February 2022
The law called “On Virtual Assets” updates the recent law on cryptocurrencies from February, meaning that The National Commission on Securities and Stock Market will be responsible for the following:
a) shaping and pursuing a policy in the field of virtual assets
b) determining the order of circulation of virtual assets
c) issuing permits to virtual asset service providers
d) carrying out supervision and financial monitoring in this area
Legislation Update
The current war situation has enhanced the “update” process. Here is what the new law means in practice:
Creates a legal framework and market regulations for cryptocurrency-based business, banking, and entrepreneurship. For example, banks can open accounts in cryptocurrencies like Bitcoin and cryptocurrencies will operate in a similar way as stocks on the stock market.
The law establishes financial monitoring measures for virtual assets, such as cryptos and tokens. The Ukrainian government can observe how individuals as Ukrainian citizens use cryptocurrencies for trade, investments, and businesses.
Cryptocurrencies are becoming a legal and regulated part of the Ukrainian economy and market. And not only citizens but also those individuals who have status as residents can, for example, open accounts for crypto-based assets. However, the law is not enabling crypto usage within all parts of the Ukrainian economy. For example, paying for insurance and other goods and services will still be done by using the government currency, hryvnia.
It is also regulated who and how a virtual assets security provider can be established. Here it is stated among other things that not such a company should not have less than UAH 5,950,000 (around 225 000 USD) of initial capital in order to become a provider of services for storage or administration of virtual assets or keys of virtual assets.
The law establishes that in order for virtual assets security providers to obtain a license permit, they must apply for a license to provide virtual asset turnover services. The eventual providers need to submit information such as numbers of means of communication as emails and telephone numbers. The law also clarifies that for carrying out other activities that are not granted by the provider permits, the eventual provider can be fined from UAH 17,000 to UAH 85,000 (around 640 to 3200 USD).
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