Ukraine plans to introduce a cryptocurrency regulatory framework in 2025, but will not offer tax incentives to the industry.
Daniil Gomantsev confirmed Ukraine’s plan to complete a bill draft to regulate cryptospace by 2025’s first quarter.
A dedicated group is reviewing the bill in close collaboration with the National Bank of Ukraine and the International Monetary Fund to provide comprehensive regulation of digital asset, with an emphasis on fiscal oversight and compliance with Anti-Money Laundering measures.
This is a framework that will create a secure and transparent market to regulate cryptocurrency for investors as well as businesses.
No incentives
Rumours had suggested, in the past, that Ukraine would offer incentives to encourage investment. Getmantsev clarified this will not be the case.
The market will be subject to the same standard taxation regulations as securities trading. Profits from cryptocurrency transactions are subject to capital gain tax when converted into fiat currency.
The regulators hope to use this strategy to reduce the risk of tax evasion, ensure that a steady flow of revenue is generated for the country through crypto-related activity and maintain fiscal integrity while minimizing the abuse potential of “tax incentives,” which could be used for “tax avoidance in traditional markets.”
This development is occurring as the conflict between Ukraine and Russia continues impacting the local economy. Cryptocurrencies are expected to become a crucial tool to access financial assistance, protect assets from inflation and facilitate cross-border transaction without having to rely on traditional banking system, which can often be disrupted during difficult times.
During the war Bitcoin was a valuable asset to Ukrainians, as it provided a way for them to transfer funds, receive donations and protect their savings from inflation.
Decentralization has proved resilient and allowed individuals and organisations to avoid restrictions placed by government and disrupted bank systems. This further solidified its role as an important store of value in times of crises.
The IMF also urged Ukraine’s crypto-legislation efforts to be accelerated.
In early 2018, the country signed a Memorandum of Economic and Financial Policy, which highlights the necessity of finalising the updating of the virtual assets legislation before the end of the year 2024.
Russia also bolsters crypto-efforts
Russia, on the other hand, has also intensified its efforts in order to gain control of the crypto-sector.
The President of Russia, Vladimir Putin, signed last month a new law that will allow the country to tax cryptocurrency assets and regulate its mining industry.
Russia, however, offers an exemption to Value Added Tax on crypto mining, and digital currency sales, unlike Ukraine which is yet to implement such provisions.
There have been discussions to create a Bitcoin Strategic Reserve, following the United States under Donald Trump.
The post Ukraine to complete crypto regulation by 2025 could be updated as new developments unfold.
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