Ukraine legalises crypto amid soaring Russia tensions

Ukrainian parliament Verkhovna Rada has passed a law that legalises cryptocurrencies, becoming one of the few countries in the last one year to do so. 

With 272 MPs voting in its favour, the tabled Bill mentions all the key requirements that crypto service providers such as exchanges should adhere to and determines the fines for violations of the law’s provisions, in addition to determining that the country’s National Securities Commission will regulate the virtual currency market. However, the country has not made bitcoin a legal tender yet (unlike El Salvador). 

This is the Eastern European nation’s second major attempt at making bitcoins a legal tender after its President had a cryptocurrency Bill to the parliament for revision last year. Of late, Elliptic has identified several cryptocurrency wallets used by Ukrainian volunteer groups and NGOs, which have collectively received funds totalling just over $570,000 — much of it over the past year. Its analysis also shows that these groups’ donations were up by over 900% in 2021. 

Following its passage, Ukraine’s Deputy Prime Minister Mykhailo Fedorov tweeted, “Ukraine is already in the top-5 countries on cryptocurrency usage. Today we made one more step forward: Parliament adopted a law on virtual assets! This will legalise crypto exchangers and cryptocurrencies, and Ukrainians could protect their assets from possible abuse or fraud.” 

Also read: Govt has sovereign right to tax cryptocurrency: FM Nirmala Sitharaman

The decision comes amidst Ukraine’s rising diplomatic tensions with Russia and also when International Monetary Fund (IMF) Managing Director Kristalina Georgieva expressed her reservations over the penetration of ‘unbacked virtual currencies’. 

“The new law is an additional opportunity for business development in our country. Foreign and Ukrainian crypto companies will be able to operate legally, while Ukrainians will have convenient and secure access to the global market for virtual assets. Market participants will receive legal protection and the opportunity to make decisions based on open consultations with government agencies. There will appear a transparent mechanism for investing in a new asset class,” Fedorov said in an official statement.  

On similar lines, the Legislative Assembly of El Salvador had passed the Bitcoin Law in June 2021. Thereafter, the Central American nation gave Bitcoin the status of legal tender in September 2021.  

While making the announcement, El Salvador Nayib Bukele had tweeted, “Tomorrow, for the first time in history, all the eyes of the world will be on El Salvador. Bitcoin did this.”

Bukele, who has been a proponent of making Bitcoin legal tender, in June last year had also announced plans to explore Salvador’s volcanoes as a way to power Bitcoin mining in an environmentally sound manner.