Ukraine has become the latest country to legalize cryptocurrency, just days after El Salvador adopted Bitcoin as legal tender.
In an almost unanimous vote on Sept. 8, the Ukrainian Parliament adopted a virtual asset bill making cryptocurrency and other digital assets legal in the country.
Known as Bill No. 3637 On Virtual Assets, the draft bill provides clarification on how individuals and businesses utilizing digital currency can be properly protected and also determines how Ukraine will regulate the cryptocurrency market going forward.
A total of 276 Ukrainian lawmakers voted for the bill, which now heads to the desk of President Volodymyr Zelensky.
As per the official website of the Ukraine Parliament, the new law “provides for a comprehensive settlement of legal relations arising in connection with the circulation of virtual assets in Ukraine, to determine the rights and obligations of participants in the virtual assets market, the principles of state policy in the field of circulation of virtual assets.”
The law is designed to address a number of issues relating to cryptocurrency, including a lack of legal regulation in the circulation of virtual assets, a lack of mechanisms for taxation of income received via virtual assets, and a lack of legal guarantees to protect the property rights of virtual asset holders and participants.
Bill No. 3637 will also address the regulation of market professionals’ virtual asset activities, the lack of mechanisms to control virtual assets for illegal activities such as money laundering, financing terrorism, and other crime, and the lack of mechanisms to attract foreign investment in high-tech sectors of Ukraine’s economy.
Previously, cryptocurrencies were somewhat of a gray area for the country, as with no laws to define them, they were neither legal or illegal meaning Ukrainians could buy, trade, and exchange them. However, there was no protection from local courts if something went wrong.
Despite this, blockchain data from the Chainalysis 2020 Geography of Cryptocurrency Report ranked Ukrainians as the top adopters of cryptocurrency in the world in September 2020, followed closely by Russia.
Between July 2019 and June 2020, Ukraine had sent $8.2 billion and received $8 billion in digital currency, as per the data.
The main regulator of the virtual assets market will be Ukraine’s Ministry of Digital Transformation, as well as the National Bank of Ukraine and the National Securities Commission, according to Kyiv Post.
The government also wants to create another regulator that will issue permits for crypto companies in Ukraine.
The Ukraine Parliament is expected to pass a set of laws and amend its tax and civil codes before it can open the cryptocurrency market for businesses and investors by 2022, a spokesman for the Ministry of Digital Transformation said.
While the new law signifies a big step in the direction of cryptocurrencies such as bitcoin being recognized as legitimate currency by governments around the world, unlike El Salvador, Ukraine is yet to make bitcoin legal tender.
Lawmakers in the Central American country passed legislation in June making bitcoin legal tender alongside the U.S. dollar, with the hopes that it will boost financial inclusion in El Salvador, where around 70 percent of citizens lack access to traditional financial services.
The law went into effect on Sept. 7, and requires businesses to accept bitcoin payments on transactions, while Salvadorans will be able to use the digital currency to make tax payments.
Despite things getting off to a somewhat volatile start, the country’s president, Nayib Bukele, wrote on Twitter on Monday that El Salvador had just bought another 200 bitcoin, bringing the country’s holdings up to 400, worth around $20.5 million at current prices.
