Ukraine’s New Law on Cryptos Explained

The concept and investment in cryptocurrency are not new in Ukraine. Ukraine has the largest number of retail crypto investments as compared to any other country. Investors in Ukraine have always been open to this investment scheme. Additionally, the country has also been monitoring this investment model for a long time now. However, the real use of cryptocurrencies came in the time of war. Ukraine has received crypto donations for more than $50 million since the war started. The country is also looking at this investment model to raise funds. This is indeed a boon in current times where the traditional banking system may take more than 2 days to process any transaction. Check here the Bitcoin trading benefits.

How is the war scenario changing the role of cryptos?

While the war is a heart-burning issue, the situation has also demanded cryptos to emerge as a stable and legal currency medium. Ukraine was able to generate more than $100 million in funds through cryptocurrencies. Most of these funds came through as donations. In a normal scenario, such a huge volume of fund transfers may have to take a day or two to process. The price of Bitcoin jumped by 14% and Ethereum by 12% since the war started. 

Understanding Ukraine’s new law

The announcement regarding the new law came from the official Twitter page of Ukraine’s digital ministry. The government clarified that cryptocurrencies will take an official and legal role. Bank accounts can be opened for companies working on cryptocurrencies and cryptocurrency exchanges will also take legal status. This is a milestone toward making Ukraine a digital and virtual currency market. 

What steps will be taken to regulate cryptos?

The National Securities and Stock market commission is directly responsible to build and provide regulatory requirements for cryptos. This regulatory authority is similar to that of a SEBI in India. The government body will also have all power to decide how cryptos need to be regulated. What type of policies needs to be drafted including how these currencies shall be monitored? It will also hold powers to issue and cancel licenses to companies wishing to operate on cryptos and other associated technologies.

The reason why Ukraine has legalized crypto suddenly?

Ukraine has the largest and most active number of retail crypto users globally. The country has been looking at options to legalize this currency model for a long time now. However, the current situation became a trigger for this decision. The current ongoing situation made it possible for Ukraine to raise more than $70 million as a donation. Kuna, the country’s first crypto exchange is now helping the country convert the current investments into a donation. Additionally, the country has also partnered with FTX, a Bahamas-based exchange. This allows for converting crypto donations into much-needed fiat currency for use by the country during the current war situation. 

The government has also launched an official page accepting donations on cryptocurrencies. Despite the growing interest, there is also a need for regulation in this sector. Along with the donation aid taking importance, there are also scamming and phishing emails attracting attention. Many investors have been prone to this scamming as well. 

It is speculated that the next step by the Ukrainian government will be to launch its non-fungible tokens. The country may come up with its native token. These tokens are fixed and do not allow them to replicate by themselves. Mass adoption of such crypto tokens will also change the face of these investments and their utility in the industry.

Global adoption of cryptocurrencies

There has been legal adoption of cryptocurrencies in many countries. The first nation that came forward with this proposal is El Salvador. It accepts Bitcoin as a legal currency medium in exchange for goods and services. Many other countries have also implemented various regulations and reforms to provide this currency model with legal status. The latest on this list is India. The country has imposed up to 30% tax on crypto investments. This is by far the highest tax slab in the country and every investor is liable to pay this tax on their investments. 

Most countries have also tied up with popular exchanges to obtain details of crypto investors. This will allow for easy monitoring and tracking capabilities.