Ukraine has legalised cryptocurrency as the country received donations worth tens of millions of dollars from individuals and groups to help it fight the Russian invasion.
Ukraine President Volodymyr Zelensky has signed a law that creates conditions for further formation of the legal field in the market of virtual assets. The National Commission will regulate the new market on Securities and Stock Market.
The signed law determines the legal status, classification and virtual assets ownership rights and specifies the list of providers of virtual assets and conditions of their registration.
The Ministry of Digital Transformation has been developing the legal framework in this area until now.
“The Ministry of Digital Transformation is also actively working to amend the tax and civil codes of Ukraine to fully launch the virtual assets market,” the government said in a statement.
Ukraine’s new law on cryptocurrency
The new Ukrainian law on cryptocurrencies determines the legal status, classification, ownership, and regulators of virtual assets and establishes registration requirements for cryptocurrency service providers. In a tweet, Ukraine’s digital ministry said: “From now on, foreign and Ukrainian cryptocurrencies exchanges will operate legally and banks will open accounts for crypto companies. It is an important step towards the development of the VA (virtual assets) market in Ukraine”.
This law has finally been passed in Ukraine stems from a need in Ukraine, which has received tens of millions in cryptocurrency donations in the weeks following Russia’s invasion of its territory.
In this first phase, Ukraine’s first cryptocurrency exchange, Kuna, will help the country spend donations with cryptocurrency-friendly providers and allow cryptocurrencies to be converted into much-needed fiat currency.
In addition, the Ukrainian government partnered with exchange giant FTX to convert crypto contributions seeking to aid Ukraine’s war effort into fiat for deposit with the National Bank of Ukraine.
Ukraine is already one of the top 5 countries in the world for cryptocurrency usage, making the law’s approval somewhat overdue. It comes shortly after Dubai established its Virtual Asset Regulatory Authority and after US President Joe Biden signed an Executive Order on crypto industry oversight.
Some have feared that crypto could weaken the West’s economic punishment against Russia following its invasion of Ukraine last month. On the contrary, virtual assets have been overwhelmingly beneficial to Ukraine during the conflict, with the nation receiving over $100 million in crypto donations in less than a month.
The nation is even preparing to launch an NFT collection about the Russian war following a cancelled airdrop.
The most significant example of legally adopting crypto into a nation’s economy has been that of El Salvador, which made Bitcoin a legal tender in September 2021. But the initiative has since been marred with problems such as technical glitches and identity fraud, in addition to a conflict between the decentralised nature of Bitcoin and an authoritarian government in El Salvador.