[ad_1]
Ukraine is ranked as the world leader in the 2020 Global Crypto Adoption Index, according to research published by Chainalysis earlier this fall. Despite this, cryptocurrencies still remain a gray area in the economy. Since 2014, Ukrainian authorities have been trying to implement cryptography legislation that would turn the country into a competitive jurisdiction for handling crypto-related businesses, but the efforts have not yielded any results. Finally, just a few months ago, the Ukrainian government unveiled a new digital asset bill to legitimize the industry – and this time around, the attempt could be successful.
The fintech strategy of the Ukrainian central bank, or NBU, is committed to legalizing businesses that use cryptocurrencies. According to the document, by 2025, crypto assets will fully enter the legislative field and a transparent infrastructure will be created to allow it to operate on the market.
The first steps along this path were taken at the end of 2019. Since then, members of parliament have passed a law on the implementation of the Financial Action Task Force’s standards for combating money laundering and terrorist financing. Among other things, the standards contain the concept of digital assets.
New attempts to legalize cryptocurrencies
The new bill appears to outline a solid action plan and delegate responsibilities. It clearly states that the government’s Ministry of Digital Transformation will be the primary regulator that controls and monitors any activity that uses crypto assets. Regarding the monitoring of suspicious crypto transactions, the department has already agreed to collaborate with the blockchain analysis firm Crystal Blockchain BV, developed by Bitfury Group.
As expected, digital assets are not considered a means of payment in the new bill. It is rather described as an intangible asset, a kind of power of attorney for ownership with which you can perform any operation, except payment.
The paper’s authors sought to advise on all areas of digital asset use, from initial coin offerings to initial (albeit overdue) exchange offers to stablecoins and other possible tokenized assets. Not only that, the new bill describes all rights and requirements related to custodians of digital assets, including exchanges, multi-signature wallets, and any organization that is now working and thriving in the crypto environment.
As the adoption of cryptocurrencies in Ukraine is growing rapidly, especially in decentralized finance and decentralized autonomous organization infrastructures, it is imperative that the new legislation highlights the difference between these two spaces. What is particularly interesting is the possibility of regulating the work of decentralized autonomous organizations, or DAOs.
However, if the new Ukrainian regulations do not cover DAO functionalities, the voting rights granted to users making decisions within a DAO can be considered illegal. This demonstrates the importance of why procedures such as protocol governance voting should be established in law.
Digital resources as a new possibility for the Ukrainian capital market
Since there is now a well-defined concept of a protected digital asset, the authors of the bill have an interest in developing tokenized ecosystems. These may also include tokenized securities under the jurisdiction of the National Securities and Stock Market Commission, a government agency that will also have the authority to regulate transactions with digital assets.
The most interesting projects will be linked to bonds. As Ukraine is actively engaged in issuing government bonds, a large number of brokers and banks are selling them to their customers as an alternative to deposits, the main investment tool available to Ukrainians.
Since the NBU is the custodian of the bonds for government bonds, this body will also be involved in the legal process if these bonds are tokenized. This cooperation will make it possible to carry out infrastructure projects, thus relaunching the securities market and making it more transparent and accessible to individuals.
What’s next?
Although the bill is pending a vote, this is the first step in making Ukraine a competitive country for the cryptocurrency business and, at the very least, a favorable environment for the development of the domestic market. Thanks to the new legislative conditions, legal entities whose activities focus on digital assets will now be able to open bank accounts and work freely by exchanging and / or issuing digital assets.
In addition to the possibility of launching a tokenized securities market, the strategic development of the fintech market by the NBU also suggests how national infrastructure projects will develop. According to the document, by 2025, the regulator will issue a central bank digital currency called e-hryvnia. This idea is already included in the “On Payment Services” bill and, unlike today’s digital assets, the CBDC will be considered legal tender.
The views, thoughts and opinions expressed herein are solely the author’s and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Ruslan Kolodyazhnyi he is chief technical officer and head of research and development at the Wirex digital payments platform. He is also chairman of the Ukrainian Banking Commission of the ICC. Ruslan has 12 years of experience in fintech, with expertise in blockchain and cryptocurrency, start-up development, development of payment solutions, online banking, and creation of technology solutions and products.
