What is this law about?
The new law defines what it is – that is, it introduces cryptocurrency into the legal field, legalizes the cryptocurrency market and provides its participants with legal status.
Market participants will be able to open accounts in banks and other financial institutions for operations with cryptocurrency. Previously, it was impossible to open such accounts in a Ukrainian bank.
Also, cryptocurrency exchanges and other specialized companies will be able to officially operate in Ukraine. They will be required to register and regularly submit reports to government agencies. And also – to disclose information about their owners.
This market will be regulated by the Ministry of Digital Transformation. It will issue permits to exchanges and other cryptocurrency companies to work in Ukraine, maintain a special register, collect reports, and the like.
Why are these changes needed?
Market participants will have the opportunity to defend themselves, in particular in court. After all, while crypto assets did not have any status, it was difficult to do this.
For example, someone believes that his bitcoins were taken illegally, but the state in no way can qualify this, because the sphere is not regulated. Therefore, the law is needed at least to guarantee property rights.
In addition, clients of exchanges will also receive protection if they believe that these exchanges have violated their rights. However, this concerns only exchanges that are registered in Ukraine.
The authorities hope that the legalization of the cryptocurrency market will attract foreign investment and develop this industry. And, of course, the official activity of the market will already bring taxes to the budget.
In addition, the regulation of the cryptoasset market should help fight the financing of terrorism and money laundering. The law is based on standards, they say in the Ministry of Digital Science.
That is, now it will be possible to pay with cryptocurrency?
No. Even if you have Bitcoin, Ethereum or another “crypt”, you will not be able to pay for a product or service in Ukraine yet.
And when this law works (and here it is not so simple – however, more on that below), the only means of payment will still be the hryvnia. The head of the National Bank, Kirill Shevchenko, immediately recalled this.
But it may happen that with the development of the market, the opportunity to pay with cryptocurrency with the help of intermediaries will nevertheless appear.
According to Deputy Minister of Digital Transformation Alexander Bornyakov, this can be the same scheme as with currency cards – you can pay with them, although neither the dollar, nor the euro, nor other currencies, according to the law, are legal tender. However, upon payment, an instant conversion of currencies occurs.
Also, the NBU is thinking about introducing its own digital money in Ukraine – e-hryvnia.
When will Bitcoin be “in law”?
Despite loud headlines in the media and statements by officials, the law is a framework, therefore, by itself, it does not create mechanisms that will trigger all these changes. That is, it, of course, gives the cryptocurrency legal status, but there is still a number of regulations to be adopted that will clarify how all this will work.
Moreover, even this basic law will not come into force until the deputies adopt another – on amendments to the Tax Code “regarding the peculiarities of taxation of transactions with virtual assets.” That is, first of all, the state will need to determine how to collect taxes from all this.
As you know, the bill starts in parliament with a specialized committee. Changes to the Tax Code – the diocese of the Committee on Finance, Tax and Customs Policy, which is headed by “servant of the people” Daniil Getmantsev.
We turned to him with the question: at what stage is the development of these changes now? But the deputy did not want to talk about it, answering succinctly: “We are working.”
But the atom Yaroslav Zheleznyak, Getmantsev’s deputy in the committee and the head of the Golos faction, said in a conversation with hromadske that the committee had not considered anything of the kind so far.
“So far, the adopted law is a dummy. Although this is definitely not the worst thing to do. It doesn’t make the situation worse – it’s a good step that just needs to be improved. At least, the world will learn about Ukraine as a country where they legalized cryptocurrency, ” – he noted.
Zheleznyak himself believes that it takes at least a year for the law to work. After all, it will be necessary to make changes not only to the Tax Code, but also to financial monitoring, and to the law on the National Bank. And then, when it will be possible to pay with cryptocurrency – and into the law on consumer rights.
“Let’s say I bought something for Bitcoin, and then I want to return this item if 14 days have not passed yet. And what to do? “, – the parliamentarian gives an example.
One of the authors of the law, a deputy from Servant of the People, Aleksey Zhmerenetsky, also believes that he will start working no earlier than in a year, and this is under an optimistic scenario.
“The Ministry of Digital Transformation should develop a register and by-laws”, – he said.
It is the Ministry of Digital Industry that is currently working on amendments to the Tax Code. The department said that they should send the bill to parliament in September. As you can understand, he has not yet reached the Rada, so it is not very clear what and how the state plans to tax.
One of the proposals of the Ministry of Digital Science is that during operations with virtual assets, you will not need to pay VAT.
What about mining?
The basic law does not affect the very process of “mining” cryptocurrencies, so mining remains in the legal field where it was. That is, it is not known where.
Law enforcement officers often call this process “illegal” and talk about “exposing illegal mining farms”. However, the argumentation about illegality is often rather dubious, because mining is, in fact, a process of mathematical calculations that the law does not prohibit.
Even the relevant Deputy Minister of Digital Transformation Alexander Bornyakov spoke about this: “Now checks are carried out by the security forces – this is often an outright manipulation. In fact, they are forcing companies to “negotiate”.
But when it comes to illegal connection of miners to power grids, the claims of law enforcement officers are obviously justified.
At the same time, the Ministry of Digital Industry does not plan to legislatively regulate the mining procedure. It is believed that it is already legal by default, so no additional regulations are required.
“The end result of mining is cryptocurrency. Our law regulates this aspect, therefore it solves the problem. After the new law comes into force, the mining company should have no questions at all, ” – explained Bornyakov.
For more information about mining in Ukraine and how you can make money on it, read our material.
And how much cryptocurrency do Ukrainians have?
According to both the Ministry of Digital Science and the author of the law, Oleksiy Zhmerenetsky, the daily turnover of cryptocurrencies in Ukraine is 1 billion hryvnia.
As calculated by the analytical company Chainalysis, Ukraine is in 4th place in the rating of the use of crypto assets. In particular, our country has the largest volume of transactions with virtual assets among market participants in the world, and at the end of last year we are among the top 10 countries with the highest earnings on bitcoins.