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Ukraine’s legislative effort involving cryptocurrency regulation had a successful first hearing in the nation’s parliament, the Verkhovna Rada.
After being debated and given the thumbs up by lawmakers on Wednesday, the virtual goods bill now has two more hearings before it can become law.
If that happens, Ukraine will join the still short list of nations that have put in place dedicated laws governing cryptocurrencies. The country was named a global leader in cryptocurrency adoption by blockchain analytics firm Chainalysis in September, when citizens actively used cryptocurrencies for savings, investments and cross-border trading.
Things did not go entirely smoothly for the bill during the parliamentary hearing: some lawmakers denounced spending time on virtual goods when there are more important issues affecting the Ukrainian economy. However, in the end, the bill received 229 “yes” votes out of 340 and passed this first stage of the legislative process.
The bill defines virtual assets as “a set of data in electronic form”, which “can be an independent object of civil transactions, as well as certify proprietary or non-proprietary rights”. The law suggests not considering virtual goods as legal tender in Ukraine.
The paper identifies virtual assets backed by goods or services, suggesting that they must be withdrawn from the market in cases where support ceases to exist.
Ownership of virtual assets is considered to be the entity that holds the private keys, unless they are held by a custodian, confiscated by court decision, or acquired illegally.
Virtual assets would be regulated by the Ukrainian Ministry of Digital Transformation and cryptographic service providers must register in order to operate in the country. Businesses must provide information on ownership structure and beneficiaries, as well as ensure that they do not facilitate money laundering and diligently protect users’ personal data.
The Ukrainian crypto community is sometimes at a disadvantage on global trading platforms. For example, in September, Bittrex temporarily stopped serving users in Ukraine, along with Belarus, Burundi, Mali, Myanmar, Nicaragua and Panama. The exchange did not provide specific reasons, citing only “the current regulatory environment” in the jurisdictions concerned.
The Ministry of Digital Transformation believes that introducing a clear regulatory regime would encourage cryptocurrency companies to work with Ukrainians and set up shop in the country. The ministry drafted the bill in collaboration with the Ukrainian crypto community, although some members are openly opposed to the very idea of cryptography regulation.
