Rada Backs Virtual Asset Legislation
The Verkhovna Rada, Ukraine’s parliament, has given its initial approval to a long-awaited bill that would legalize cryptocurrencies and create a framework for their taxation. The draft law, titled “On Virtual Asset Markets”, passed its first reading on Wednesday with broad support.
According to crypto outlet Forklog, “246 deputies voted for the adoption of the document,” out of 321 present, with just one lawmaker rejecting it. The proposed legislation seeks to determine the legal status of digital assets like Bitcoin while ensuring that profits from crypto transactions are taxed.
Taxation Rules for Crypto Gains
The bill, formally known as No. 10225-d, outlines a comprehensive taxation model. Profits from virtual asset (VA) transactions will be calculated based on the difference between sale revenues and acquisition costs. These gains will be included in total annual taxable income and taxed at 18%, aligning them with Ukraine’s standard income tax.
To encourage compliance, the bill also offers a preferential 5% rate for investors who convert their holdings to fiat within the first year after adoption. Meanwhile, crypto-to-crypto exchanges will remain tax-exempt, and small-scale transactions that do not exceed the annual minimum wage will also be untaxed.
Additional exemptions cover the value of digital coins obtained without payment, ensuring that minor or non-commercial activities are not burdened with taxation.
Regulatory Oversight and Enforcement
The legislation assigns the National Bank of Ukraine (NBU) as the primary regulator of the VA market, reflecting its central role in financial oversight. However, lawmakers have indicated that a second regulator will be appointed, though it has yet to be determined.
This body would wield significant powers, including the ability to request information from individuals and businesses, conduct on-site inspections, seize property, and freeze assets. Such measures highlight Ukraine’s determination to combat crypto-related crime and strengthen its regulatory framework.
kraine’s Long Road to Regulation
Wednesday’s vote represents a breakthrough for Ukraine, a country that consistently ranks among the world’s leading adopters of crypto, according to Chainalysis. The nation first attempted to regulate the sector in early 2022, but the Russian invasion in February of that year forced lawmakers to shelve the effort.
Since then, crypto adoption has surged as Ukrainians sought alternatives amid strict financial restrictions designed to prevent capital flight during wartime. Still, the NBU has taken a cautious stance, recently rejecting a proposal to allow crypto in the country’s official reserves, warning it could complicate EU integration.
Balancing EU Rules and Domestic Needs
While the bill’s passage is significant, hurdles remain. The legislation must be reconciled with EU regulations, particularly the Markets in Crypto Assets (MiCA) framework, which Ukraine is expected to adopt as part of its integration process.
Earlier this year, reports suggested the Office of President Volodymyr Zelenskyy had delayed the bill due to inconsistencies with MiCA. Nonetheless, supporters argue that adequate regulation could help Ukraine recover up to $10 billion currently lost to the lack of oversight and rampant crypto-related crime.
With the bill now moving forward, lawmakers aim to strike a balance between domestic economic recovery and alignment with European standards. If fully adopted, Ukraine will finally have a clear legal foundation for its booming crypto sector.
