The Economic Development and Trade Ministry of Ukraine has officially launched a “state policy” that will legalize cryptocurrency-related activities.
29 October 2018 | AtoZMarkets – Ukraine ‘s Ministry of Economic Development and Trade has officially launched a “state policy” that will determine the classification and legalization of cryptocurrency-related activities in the country.
According to the report from Ukrinform, a Ukraine-based information and news agency, the process may take up to three years to complete.
Ministry to Adopt Laws for ICOs and Smart Contracts
According to an official press release published on the Ministry’s website, the government intends to create understandable conditions for conducting crypto-related activities and to usher in the adoption of the concept of a state policy for virtual assets and virtual currencies.
To this end, the Ministry has proposed certain legal definitions for some of the most common terms in cryptocurrency, like “virtual currency,” “virtual assets,” “Initial Coin (or token) Offerings” (ICO), “mining,” “smart contracts,” and “tokens.”
Expert estimates, according to the report, suggest that companies in the country have generated $100 million through ICOs and that crypto miners are making $100 million annually within its borders. The government added that daily volume of trading cryptocurrencies with the Ukrainian hryvnia is about $2 million and that Ukraine is “among the top 10 countries in the number of virtual currency users.”
Moreover, the Ministry stated that due to the legal uncertainty about virtual currencies-related activities, including their legal status, taxation of transactions, and the possibility of signing smart contracts,” businesses in the country face many difficulties, while the fintech sector develops “in the shadows.”
This, the report claims, result in “negative consequences for all stakeholders,” as there is a lack of proper consumer protection rights, and can bring about complications in banking services and regulatory compliance for ICO issuers.
The report reads:
The state in turn lacks taxes and foreign exchange earnings. It has no opportunity to carry out financial monitoring in this area due to lack of statistical information. As a result, foreign investments and opportunities for creating new high-paying jobs are being lost.
Ukraine’s Crypto-Related Activities Will Be Legalized in 2021
To salvage the situation, the Ministry is reportedly introducing a new regulatory concept, that is set to be implemented in two stages. The first stage is about market analyzation, to learn more about the trends and any issues that they need to prepare for in the market from 2018 to the end of 2019.
The second stage would happen in 2020-2021. Based on the documents available, Ukraine is set to legally recognize cryptocurrency wallet providers and platforms in the industry as “subjects of primary financial monitoring.” The government claims its new regulatory concept will be able to “protect the rights of consumers” in the space.
Market participants will have the opportunity to use banking services, to officially attract foreign investments, to conduct ICO / ITO as Ukrainian companies, to conclude smart contracts and to carry out barter transactions for the exchange of goods (services) into virtual currencies.
Ukraine Crypto Taxation Bill
Following the introduction of a crypto taxation bill, AtoZMarkets covered earlier, that Ukrainian authorities plan to impose a five percent tax on individuals and legal entities that deal with virtual currencies.
The tax bill initiated by 23 government officials, suggests a five percent tax on individuals and legal entities that deal with cryptocurrencies, including tokens.
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