Ukraine is set to legalize cryptocurrencies in early 2025, as confirmed by Daniil Getmantsev, head of the tax committee of the Verkhovna Rada. The proposed legislation, currently under review, aims to regulate digital assets while maintaining strict fiscal oversight. The initiative is being developed in collaboration with the National Bank of Ukraine (NBU) and the International Monetary Fund (IMF).
Despite initial speculation about potential tax incentives, the new framework will apply standard taxation rules, similar to those used for securities trading. This means profits from cryptocurrency transactions will be taxed when converted into fiat currencies.
Legalization Amid War and Economic Turmoil
The move to legalize cryptocurrencies comes at a critical time for Ukraine, as the nation continues to face economic challenges stemming from its ongoing conflict with Russia. Legalizing digital assets could provide a lifeline for citizens, offering a regulated means to access financial support, safeguard assets from inflation, and conduct cross-border transactions.
Cryptocurrencies have already played a pivotal role in humanitarian aid and donations during the war. By establishing a legal framework, Ukraine seeks to leverage this momentum while creating a transparent and secure environment for digital asset transactions.
Ukraine Places Emphasis on Transparency and Stability
The draft legislation, expected to reach the Verkhovna Rada for its first reading in early 2025, focuses on financial stability and compliance with Anti-Money Laundering (AML) measures. The working group tasked with finalizing the bill is ensuring it aligns with international standards to foster trust among businesses and investors.
Ukraine’s approach mirrors global trends in crypto regulation and positions the country to become a key player in Eastern Europe’s digital asset market. This is particularly significant as the region has seen a surge in decentralized finance (DeFi) activity, with over $499 billion worth of cryptocurrency transacted between July 2023 and June 2024, according to Chainalysis.
No Tax Breaks
Contrary to expectations within the crypto industry, Ukraine’s crypto legislation will not include tax breaks. Getmantsev emphasized the need to prevent tax evasion, stating that crypto-related profits will be subject to capital gains taxes when converted into fiat.
“We are cautious about tax incentives as they can be exploited for tax evasion in traditional markets,” he explained. This strategy ensures that revenue generated from cryptocurrency transactions contributes to the country’s economy while minimizing the risks of financial misconduct.
