The Ukrainian parliament today allowed the legalization of cryptocurrency in the country and the formalization of crypto exchanges in the country.
Cryptocurrencies, including Bitcoin, are still by far the legal gray area in Ukraine, the seventh most populous country in Europe. However, blockchain data company Chainalysis ranked Ukrainians as the world’s largest recipients and listed them as one of the cryptocurrency adopters in September 2020.
If the proposed bill is signed into law, following which banks will have the freedom to take crypto company accounts, while the citizens who own it will have legal protection in the event of theft.
The Ministry of Digital Transformation, created back in 2019 to improve digital literacy and online access, enacted legislation and is responsible for tax enforcement, which will take effect this fall after the tax code is amended and signed by the President.
According to a 2019 report from the International Monetary Fund, Ukraine’s nominal GDP is out of proportion to its population, ranking 23rd out of 46 countries. The ministry further wants to increase that number by attracting crypto businesses to start their operation in their region.
“In particular, the adoption of special legislation will stimulate the attraction of foreign exchange to the Ukrainian market,” Deputy Minister Oleksander Bornyakov said in a press release shared with the decryption. “It will also become a powerful way to further develop the crypto-related atmosphere in Ukraine”.
If crypto adoption is high in Eastern Europe, to be precise, it is always important that it be legalized or regulated. According to its report, Chainalysis has observed a high level of corruption, seizure of assets, and declining confidence in banks in Ukraine.
Citizens turned to cryptocurrencies to protect their assets and thus ended up sending $8.2 billion worth of cryptocurrencies last year. Regulated exchanges and crypto businesses can drive that number up.
The Ministry of Digital Transformation has been active on bringing up crypto initiatives for months. In January, the National Bank of Ukraine entered into an agreement with the Stellar Development Foundation to develop the central bank’s digital currency four years ago – a virtual version of hryvnia. Stellar will help develop regulations and cryptocurrency infrastructure as part of an agreement put forward by the ministry as a way to make the country more competitive in the Eastern European market.