Ukraine to legalize cryptocurrencies. Virtual assets bill passes its second reading

On September 8, 2021, the Ukrainian Parliament has voted for draft No. 3637 of the Virtual Assets Bill. It regulates the industry of cryptocurrencies, and now holders of such assets will legally exchange and declare them, and international crypto companies may register a blockchain business in Ukraine.

In total, 276 deputies voted for this draft.

What will it regulate

The document defines the meaning and legal status of virtual assets, ownership rights, and terms of transactions with such assets in Ukraine. As AIN.UA reported, after the signing by the President, the following changes will come into force:

• cryptocurrencies will be legal;
• market players will be entitled to judicial and other ways of protecting virtual assets rights;
• entities in Ukraine will be entitled to operate international exchanges where virtual assets are traded. However, for this, they (like other providers of services related to cryptocurrencies) will have to pass state registration in Ukraine and submit reports on their activities to the competent authorities;
• the Ministry of Digital Transformation will be the regulator of the virtual assets market; in some cases, the National Bank of Ukraine and the National Securities and Stock Market Commission will also have the authority;
• according to the bill, there will be a new regulator – the National Virtual Assets Regulatory Service (NVARS), which will issue licenses to crypto companies in Ukraine;
• financial monitoring of the virtual assets market will be going under the recommendations of FATF (Financial Action Task Force).

“Cryptocurrency owners will get a number of advantages. Because there will be a legal base for cryptocurrencies, they will be able, at least, to protect their virtual fortune if something happens. They also will be entitled to exchange cryptoassets and declare them. This process will be completely “transparent.” In addition, we expect that there will be a real market of intermediaries allowing pay for goods with cryptoassets, store, and exchange them. So, there will be more options for their use,” told Alex Bornyakov, Deputy Minister of Digital Transformation for IT Development, to the Minfin tabloid.

Remarkably, it is a framework bill. So, it does not prescribe the mechanisms and procedures for actions with virtual assets yet — the draft will only give a definition and provide a legal base for them. Well, the actual application will be defined additionally in the bylaws.