Ukraine legalizes crypto industry

At 11:00 p.m. Beijing time on March 16, the official Twitter of the Ministry of Digital Transformation of Ukraine announced that Ukraine has legalized the encryption industry, and President Vladimir Zelensky officially signed a “Regulation on Virtual Assets”. By law, crypto asset businesses overseas and in the country will operate legally, and banks will open accounts for crypto companies.

The law signed by Zelensky was passed by Ukraine’s Supreme Parliament as early as February 17. The law determines the legal status, classification and ownership of virtual assets, and determines the market regulator as the State Securities and Stock Market Committee.

“The law creates conditions for Ukraine to launch a legal market for virtual assets.” This sentence was published on the official website of the Ministry of Digital Transformation of Ukraine. And virtual assets (crypto assets) have provided substantial assistance to Ukraine, which is deeply involved in the Russian-Ukrainian war.

Since  Ukraine began accepting donations of crypto assets on February 26  , the country has so far received donations worth nearly $100 million in crypto assets, including Bitcoin (BTC), Ethereum (ETH), U.S. dollar stablecoins (USDT) ) and even Dogecoin (DOGE) etc., which supply the military needs of the Ukrainian Armed Forces.

Before the war, Ukraine had intentionally brought the crypto industry into compliance management; during the war, Ukraine unexpectedly received a lot of aid from crypto assets, and such a “two-way run” opened up another space for the crypto industry to develop.

Ukraine will fully launch the virtual asset market

“Ukraine has legalized the crypto industry — the president signed a law.” On the evening of March 16, the Ministry of Digital Transformation of Ukraine published the news on its official website and advertised it through its official Twitter.

According to the announcement of the Ministry of Digital Transformation of Ukraine, the Law on Virtual Assets of Ukraine signed by President Volodymyr Zelensky determines the legal status, classification and ownership of virtual assets; the market regulators are the National Bank of Ukraine and the National Securities and Stock Market Commission; Create conditions for the further formation of the legal field of the virtual asset market; determine the list of virtual asset providers and their registration conditions; provide for the implementation of financial monitoring measures in the field of virtual assets.

In addition, as a regulator, the National Securities and Stock Market Commission will formulate and implement national policies in the field of virtual assets; determine the turnaround sequence of virtual assets; issue licenses to virtual asset service providers; and conduct regulatory and financial oversight in this field.

The announcement also said that so far, the Ministry of Culture has been developing the legal field in this area, working with industry representatives to develop a profile law. At present, the Ministry of Finance is also actively amending the Ukrainian tax code and civil code to fully launch the virtual asset market. The signed law came into force on the date of the amendment to the Ukrainian tax code, which deals with the tax characteristics of virtual asset transactions.

The bill of the “Ukrainian Virtual Assets Law” is actually an amended version. The early version was proposed in September last year, but President Zelensky asked for the amendment. The amended version finally won the votes of 272 members of Congress and was voted for by 272 members of Congress. It was passed by the Ukrainian Supreme Council on May 17.

Ukraine legalizes crypto industry

Ukraine officially announces the legalization of the crypto industry

Even before the bill was passed, crypto-assets were never characterized as illegal in Ukraine, a country that is even a big consumer of crypto-assets. According to analysis by blockchain data service Chainalysis in 2020 and 2021, Ukraine’s per capita use of encrypted assets was the highest in the world in 2020, and it will remain the fourth highest in 2021.

Unlike El Salvador, a Central American country, which directly incorporated Bitcoin into the legal tender system, Ukraine has chosen a more moderate way of accepting encrypted assets—incorporating the encryption industry into comprehensive compliance management in the formulation and reform of laws.

As Ukrainian Deputy Prime Minister and Minister of Digital Transformation Khaylo Fedorov stated on February 17, the day the bill was passed, “The new law provides additional opportunities for business development in our country. Foreign and Ukrainian crypto companies will be able to legally operations, while Ukrainians have easy and safe access to the global virtual asset market. Market participants will receive legal protection and the opportunity to make decisions based on open consultations with government agencies and to invest in new asset classes with transparent mechanisms.”

The Russian-Ukrainian War Increases the Development Space of the Crypto Industry

The Ministry of Digital Transformation of Ukraine has publicly stated that Ukraine is one of the top five countries in the world in terms of the number of encrypted asset users. There is a dedicated blockchain developer association in the country, and the number of local encryption startups is growing. The country has been working to promote compliance in the crypto industry since last year.

It can be said that the legalization of the crypto industry in Ukraine is a matter of time, and the Russian-Ukrainian war is likely to accelerate the process.

On February 24th, the conflict between Russia and Ukraine broke out. Two days later, Ukraine opened a donation channel for encrypted assets and announced the donation addresses for BTC, ETH and USDT. Unexpectedly, encrypted donations are continuously entered into the official addresses. In addition to publicly accepting these types of assets, there are also popular public chain assets Solana (SOL), Polkadot (DOT), and even MemeCoin Dogecoin ( DOGE).

Two weeks after Ukraine accepted the donation, on March 11, the country’s Deputy Minister of Digital Transformation Alex Bornyakov said that the total amount of donated crypto assets was close to $100 million. You know, the EU’s humanitarian aid funding plan for Ukraine is 90 million euros (included in a 500 million euro package), equivalent to $99.366 million.

Crypto asset aid arrived in Ukraine faster than fiat. In a conference call, Bornyakov said that in the war situation, “the national bank is not really operating, and encryption is helping to execute fast transfers with almost immediate results.”

Ukraine legalizes crypto industry

The use of crypto donations announced by the Ministry of Digital Transformation of Ukraine

On March 12, the deputy minister revealed on Twitter the whereabouts of the crypto donations, “into the military needs of Ukraine.” According to him, the funds have provided the Ukrainian army with 5,500 bulletproof vests, 500 bulletproof Vest bulletproof panels, 500 helmets, 3125 thermal cameras and optics, 60 walkie-talkies, as well as 3427 medicines and over 400,000 packed lunches.

Cryptoassets unexpectedly took on a charitable use of “donations” in this war at the behest of Ukraine, and while it has yet to prove to be a reliable store of value or payment tool, the war is likely to Bringing development opportunities to the crypto industry.

Michelle Ritter, CEO of Silicon Valley tech firm Steel Perlot, cited the example of social media, “The pivotal moment for social media came in 2011, when videos, tweets and other posts from Libya, Egypt, Yemen, Syria and Bahrain sparked a The Arab Spring…now…we find ourselves at a similar turning point (with cryptocurrencies).”

Bridgewater told clients this week that the Russian-Ukrainian war was the first major event in which cryptocurrencies became part of the war, “These short-term dynamics coincide with structural changes in the cryptocurrency market, and we believe that with major institutional investors With increased adoption and deepening of the surrounding ecosystem, these changes are self-reinforcing.”

Today, the crypto industry is legalized in Ukraine. For example, crypto companies such as exchanges can obtain compliant operation licenses in Ukraine. Banks will open accounts for crypto companies. Ukraine is also an important market for crypto asset consumers. The conditions are a rare development environment for some players in the crypto industry.

There are not many countries in the world that have put encrypted assets under supervision, and many countries have adopted a comprehensive ban policy. The encryption industry is destined to develop step by step in many games, and the “two-way travel” between Ukraine and the encryption industry has added a new industry to this emerging industry. The new space, as stated in the country’s announcement announcing the Virtual Assets Law, “is another important step in bringing the crypto industry out of the shadows and launching a legal market for virtual assets in Ukraine.”

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