The Verkhovna Rada passed Law No. 3637, “On Virtual Assets,” after President Volodymyr Zelenskyy returned it to the parliament with amendments. As a result, the National Securities and Stock Market Commission will regulate the virtual asset market.

What does the law provide?

The document defines the concept and legal status of a virtual asset, ownership rights, and terms of transactions with such assets in Ukraine. As reported by AIN.UA, after the President’s signature, the following changes will take effect:

  • Cryptocurrencies will receive legal status.
  • Market participants will have the right to legal and other ways to protect the rights to virtual assets.
  • International exchanges where virtual assets are traded will be able to operate legally in Ukraine. However, to do so, they (as well as other providers of services related to the circulation of critical currencies) will have to register in Ukraine and submit reports on their activities to the competent authorities.
  • Financial monitoring of the virtual assets market will be carried out in accordance with the recommendations of the FATF (Financial Action Task Force on Money Laundering).

“The new law is an additional opportunity for business development in our country. Foreign and Ukrainian crypto companies will be able to operate legally, and Ukrainians will have convenient and secure access to the global virtual asset market. Market participants will receive legal protection and the opportunity to make decisions based on open consultations with government agencies. There will be a transparent mechanism for investing in a new asset class,” says Mykhailo Fedorov, Minister of Digital Transformation.

It should, however, be noted that it is a framework law. That is, it does not provide for specific mechanisms and procedures for dealing with virtual assets but only defines them. And practical application thereof will be detailed in by-laws.

What changes has the President made?

The initial version of the law, adopted by the Verkhovna Rada in the second reading in September 2021, provided for the creation of a new institution, the National Virtual Assets Regulatory Service (NVARS), which will issue permits to crypto companies to operate in Ukraine and regulate the virtual asset market.

Now, according to the changes, the National Securities Commission will regulate the market of virtual assets. Among other things, the commission will:

  • Formulate and implement a policy in the field of virtual assets.
  • Determine the order of turnover of virtual assets.
  • Issue permits to virtual asset service providers.
  • Carry out supervision and financial monitoring in this area.

At the same time, the team of the Ministry of Finance continues to work on appropriate amendments to the Tax and Civil Codes of Ukraine to kick off the market of virtual assets fully.

“Today, the potential of the global crypto industry is determined by billions of investments. Its growth rate is ahead of traditional sectors of the economy. In Ukraine, the virtual asset market can become a powerful digital economy sector. Thanks to the adopted Law, we have every chance to become a leading country for business development in this innovative field,” says Oleksandr Borniakov, Deputy Minister of Digital Transformation for IT Development.

What market players say

The world’s largest cryptocurrency exchange Binance is optimistic about the legislative changes.

“Binance congratulates the entire cryptocurrency industry on the adoption of the law on virtual assets. It is a massive step for the whole market. Currently, there is a global transformation in the field of cryptocurrency regulation, and it is nice to see that Ukraine is taking such a progressive position on the issue.

Ukraine has become a country where virtual assets have acquired legal status. This step creates a vast market, which will now operate legally, and the country will become even more attractive to investors, crypto companies, and users,” comments Kiril Khomiakov, General Manager of Binance in Ukraine.

The law will allow cryptocurrency owners in Ukraine to legally exchange assets, file income earned from cryptocurrency transactions with tax returns, start blockchain businesses, and use cryptocurrencies in their daily lives.

“At Binance, we particularly welcome the fact that Ukrainian cryptocurrency users are now protected from cryptocurrency fraud and crime by law.”

He also noted that the law is based on the world’s best practices and will contribute to the de-shadowing of the cryptocurrency market.