The NSDC suggested to regulate cryptocurrency turnover matters in Ukraine

The NSDC suggested to regulate cryptocurrency turnover matters in Ukraine

The National Coordinating Center for Cyber Security assigned the relevant authorities to form a task group of the NBU, the Ministry of Finance, the National Securities and Stock Market Commission, the Security Service of Ukraine, the National Police, the State Financial Monitoring Service, the State Fiscal Service, and the State Service of Special Communication and Information Protection representatives in order to develop regulatory proposals for:

– the settlement of cryptocurrency turnover in Ukraine;

– the introduction of the state authority and the order for cryptocurrency market operation;

– the determination of the procedure cryptocurrency transactions monitoring, and identification of parties thereto;

– governing the taxation issue as to income out of performance under cryptocurrency transactions.

Also, it was requested to develop a mechanism for the law enforcement authorities to access cryptocurrency exchanges data, establishing the relevant obligation of subjects thereof to keep information on all transactions within the same term as such specified by the law for financial organizations,  and to disclose the information about the client upon reasonable query.

The relevant decisions were made at the meeting of the National Coordinating Center for Cybersecurity headed by the Secretary of the National Security and Defense Council.

It is expected the development and implementation of all these measures will contribute to enhancing international cooperation as to cryptocurrency turnover integrated regulation and will prevent criminalization of the segment.

At the same time, the state regulator criticized the recent draft laws on cryptocurrency.

Thus, the National Commission on Securities and Stock Market reported its disapproval of the Draft Laws “On Cryptocurrency turnover in Ukraine” (No. 7183) and “On the Stimulation of the Market of Cryptocurrency and its Derivatives in Ukraine” (No. 7183-1).

The major comments of the authority as to the Draft Laws are focused on terminology, cryptocurrency concept and state regulation thereof. Thus, the Commission states the application of the “cryptocurrency” term within legislation is unreasonable, since fundamentally such is derived by means of financial engineering, and currency has nothing to do therewith. In this regard, the use of the definition “cryptounit” shall be more efficient.

In addition, officials consider strict regulation of cryptocurrency as unadvisable, since in terms of global uncertainty the issue of the cryptocurrency status regulation shall be exercised by means of the particular cryptounit legalization by a financial regulator. The criteria for such recognition shall be the nature and the quantity of parties to transactions conducted, accounting procedures thereunder and other circumstances.

It shall be noted, authors of the Draft Law No. 7183 determined the cryptocurrency as a program code being the item of property, applicable as means of exchange. Information on the cryptocurrency shall be recorded and stored within a blockchain system as accounting units thereof in the form of data (program code). Pursuant to the Draft Law, the state regulation of relations regarding cryptocurrency turnover shall be assigned to the NBU. At the same time, the state will bear no obligations and guarantees, or refund the value of cryptocurrency in case of its depreciation or loss for any other reasons.

The revised version of the initiative – Draft Law No. 7183-1 – suggests not only to define the legal framework for cryptocurrencies exchange and miners’ works (up to the new kind of the activity under the Business Activities Classification), but to grant preferences for market users as well, in order to stimulate the new industry – cryptoeconomy. According to the authors of the Draft Law, the cryptocurrency itself shall be deemed as a financial asset. Preferential electricity tariffing for miners in industrial parks, as well as simplified taxation, are among the incentives for the industry development.