Ukrainian Parliament Passed New Digital Asset Regulations

Crypto adoption seems to be going smooth, as Ukraine joins the list of nations, which passed legislation regulating foreign and domestic cryptocurrency exchanges operating from within the country.

The  “On Virtual Assets” draft law, which was in motion since 2020, has finally come to adoption by the Ukrainian Parliament on September 8, 2021. Тhe law, based on the Financial Action Task Force on Money Laundering (FATF) standards, is legally recognizing cryptocurrency in the country for the first time. Until now, the crypto sector in Ukraine was completely in the grey zone of legislation.

Ukraine’s Ministry of Digital Transformation will oversee the new virtual asset regulations implementation, as well as adhering to international standards for guiding the newly emerging crypto industry in the country.

Anastasia Bratko of the Ministry of Digital Transformation commented on the new law, noting that the new legislation opens the doors for companies to launch virtual asset markets in Ukraine. Also, banks now are eligible to open accounts for crypto companies.

“Ukrainians will also be able to declare their income in virtual assets,” Bratko noted, adding that the law “guarantees judicial protection of the rights to virtual asset owners.” Furthermore, an official announcement by the ministry states that “the country will receive additional tax revenues to the budget, which will be paid by crypto companies.”

“The adopted norms establish rules for service providers related to the circulation of virtual assets and contribute to the market’s de-shadowing,” the announcement reads.

However, Virtual asset service providers (VASPs) “must have an impeccable business reputation”, with entities having to show ownership structure for identifying ultimate beneficial owners. Also, VASPs have to implement internal anti-money laundering measures.

Oleksandr Bornyakov, Deputy Minister of Digital Transformation of Ukraine, stated that the provisions contained in the legislation are to attract foreign crypto exchanges into the Ukrainian market.

“It will become a powerful incentive for the further development of the crypto-sphere in Ukraine. Banks will open accounts for them and conduct transactions with a new class of assets. I am sure that society, business, and the state will benefit from the legalization of the new sector of the economy,” Bornyakov added.

Meanwhile, Ukraine’s Deputy Prime Minister and the head of the country’s Ministry of Digital Transformation, revealed that the ministry is exploring ways to bring a central bank digital currency (CBDC) for salary payments in an early pilot of the technology. Furthermore, Ukrainian President Volodymyr Zelenskyy already signed a law enabling the country’s central bank to issue a CBDC.