The status of cryptocurrency may be regulated by the law

It is suggested to determine the legal status of the cryptocurrency and legal grounds of the organization and activities of subjects of cryptocurrency transactions.

The draft Law “On the circulation of the cryptocurrency in Ukraine” is intended to create legal conditions for the development and mining of cryptocurrencies in Ukraine, their use in everyday life, protection of rights of market participants. To this end, it was proposed not only to define the legal framework for the exchange of cryptocurrencies and the work of miners (up to introducing the new type of business activities into the Classifier of Types of Business Activities), but also to provide preferences for market users to stimulate crypto-economics as a new industry. The authors of the draft law believe that cryptocurrency should become a financial asset.

At the same time the National Bank of Ukraine currently does not recognize bitcoin either as a currency or as a means of payment and sees a fraudulent threat in the cryptocurrency.

The initiators of the draft law, to the contrary, consider the absence of any legal regulation on cryptocurrency as a fraudulent threat. While cryptocurrencies in Ukraine are in limbo, the risks of using this tool for fraudulent purposes are increasing. After all, in the absence of legal regulation there are no mechanisms to protect unqualified market participants and no restrictions for abuse.

The draft law classifies market participants into three groups, namely, (1) financial institutions (stock exchanges), (2) crypto-investors and (3) miners. The principle of non-interference of the state in the functioning of the market is preserved: professional participants are not liable for the state’s obligations and vice versa. The participants operate in the market at their own risk.

The following three types of operations will be subject to taxation, namely, (1) the acquisition of cryptocurrency, (2) the purchase of goods or services using cryptocurrency and (3) exchange for hryvnia. In addition, the developers of the document prescribed preferential tariffs for electricity in industrial parks and for miners, as well as simplified taxation as incentives for the development of cryptocurrency.