As the market continues its massive rally, Ukrainian lawmakers are preparing to legalize crypto soon. Local reports indicated that parliament is working on a draft law but is not considering tax exemptions for digital goods.
Ukraine Prepares To Legalize Crypto
During the forum “Opportunities for Domestic Investment”, Danylo Hetmantsev, Head of the Ukrainian Parliament Committee on Finance, Tax Policy and Customs, revealed that Ukraine intends to legalize digital assets in the coming months.
Hetmantsev said that the parliamentary working group is working with the National Bank and the International Monetary Fund (IMF) on a draft law to pass the law in early 2025, Ukrainska Pravda media reported:
When we talk about cryptocurrency, the [parliament’s] the working group finalizes the draft law for first reading. I believe that the document, developed in cooperation with the National Bank and the IMF, will be ready after the New Year. We intend to pass this law and legalize cryptocurrency in the [2025’s] the first quarter.
The head of the Committee also noted that the tax exemption will not be applied to digital goods. Instead, they plan to follow the model used for securities, which means that profits will be taxed when the assets are converted into cash.
Hetmantsev also explained that they will take a “very cautious approach to using crypto-currency to avoid paying taxes” after consulting with the IMF and European experts, “as it may be easier to evade taxes in traditional markets.”
The Regulatory Landscape of Ukraine
President Volodymyr Zelenskyy signed the law “On Virtual Assets” in March 2022, setting the legal framework for regulating the digital asset market in Ukraine. However, the law did not go into effect until early 2024, as it was awaiting amendments to the country’s Tax Code.
This resulted in the loss of millions of potential tax dollars, as the absence of crypto-related laws meant that exchanges had no legal obligations to pay taxes to the Ukrainian authorities on profits earned from digital assets.
In April, the IMF asked Ukraine to complete a review of its crypto legislation by the end of 2024. According to a Facebook post from the Deputy Minister of Digital Transformation Oleksandr Bornyakov, the IMF noted that the lack of regulation of the new industry poses a threat. “price stability and efficiency of financial transfers.”
Bornyakov noted that the delegation of the Ministry of Digital Transformation emphasized the need to introduce state control of the crypto asset market, pointing to two signed laws already registered for consideration in the parliament.
In addition, he emphasized that crypto legislation can have a positive financial impact on the country and increase the growth of the Ukrainian economy, stressing that quick action will also strengthen international confidence in the country:
In times of war, we must take advantage of the full range of opportunities and develop new economic sectors. Legalization of the crypto sector can have a strong economic impact, generating profits of billions of hryvnias.
It is worth noting that Ukraine has received significant help from the global community through crypto donations since the beginning of the Russian invasion in February 2022, with figures such as Vitalik Buterin and Justin Sun donating millions of digital assets.
Bitcoin is trading at $100,715 in the one-week chart. Source: BTCUSDT on TradingView
Featured image from Unsplash.com, Chart from TradingView.com
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