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Ukraine hopes that its new digital asset legislation would entice multinational cryptocurrency exchanges to set up shop in the Eastern European country.
The Ukrainian Parliament has passed legislation that governs both foreign and indigenous cryptocurrency exchanges that operate within the country.
The Ukrainian Parliament passed the draught law “On Virtual Assets” on Wednesday, making cryptocurrencies legal in the country for the first time. The legislation is based on existing guidelines issued by the Financial Action Task Force on Money Laundering, an intergovernmental policy-making group (FATF).
Ukraine’s Ministry of Digital Transformation will be tasked with overseeing the implementation of the new digital asset regulation and guiding the industry’s growth in adherence to international standards.
Anastasia Bratko of the Ministry of Digital Transformation said the law allows companies to launch digital asset markets in Ukraine and enables banks to “open accounts for crypto companies.”
“Ukrainians will also be able to declare their income in virtual assets,” she said, adding that the law “guarantees judicial protection of the rights to virtual asset owners.”
An announcement from the ministry emphasized that “the country will receive additional tax revenues to the budget, which will be paid by crypto companies,” adding:
“The adopted norms establish rules for service providers related to the circulation of virtual assets and contribute to the market’s de-shadowing.”
Virtual asset service providers (VASPs) will be obliged to disclose their ownership structure in order to identify their ultimate beneficial owners, and they will be expected to maintain a “impeccable corporate reputation.” VASPs must also maintain internal anti-money-laundering measures.
Oleksandr Bornyakov, Ukraine’s deputy minister of Digital Transformation, emphasised aspects in the legislation aimed at attracting “foreign exchange to the Ukrainian market,” adding:
“It will become a powerful incentive for the further development of the crypto-sphere in Ukraine. Banks will open accounts for them and conduct transactions with a new class of assets. I am sure that society, business and the state will benefit from the legalization of the new sector of the economy.”
Mykhailo Fedorov, Ukraine’s deputy prime minister and head of the country’s Ministry of Digital Transformation, said last month that his ministry was looking at utilising a central bank digital currency to handle wage payments in an early pilot programme.
In July, Ukrainian President Volodymyr Zelensky signed legislation allowing the country’s central bank to issue a CBDC.