Currently, Ukraine trades more cryptocurrency than fiat currency. Bitcoin and other digital assets are now fully legal

Currently, Ukraine trades more cryptocurrency than fiat currency. Bitcoin and other digital assets are now fully legal

The Ukrainian parliament approved a measure legalizing cryptocurrencies on Thursday, laying the groundwork for the regulation and management of digital assets such as Bitcoin. “This will legalize crypto exchanges and cryptocurrencies, and Ukrainians will be able to protect their assets from possible abuse or fraud,” Ukraine’s Deputy Prime Minister and Minister of Digital Transformation, Mykhailo Fedorov, tweeted. Last September, Ukraine’s parliament enacted a law legalizing cryptocurrencies, but President Volodymyr Zelenskyy vetoed it the following month. According to Zelenskyy, Ukraine cannot afford to build a new regulatory system to manage cryptocurrency. The new version of the Law on Virtual Assets, which passed parliament Thursday, puts crypto regulation under the oversight of the National Commission on Securities and Stock Market, per Zelenskyy’s suggestion. Importantly, the bill does not recognize Bitcoin or other cryptocurrencies as legal tender. Ukraine has not gone the route of El Salvador, which adopted Bitcoin as an official currency in September last year. But the new law will provide reassurance to businesses operating in what was previously a legal grey area. In an official statement, Fedorov added, “Market participants will get legal protection and the chance to make decisions based on open conversations with government agencies.” Despite the lack of institutional regulation in the past, Ukraine has established itself as Europe’s main crypto hub. In its 2021 Global Crypto Adoption Index, which analyzes the amount and value of crypto exchanged in a country, market consultancy Chainalysis ranked Ukraine fourth globally, behind Vietnam, India, and Pakistan. According to the New York Times, the Eastern European country processes more transactions per day in cryptocurrency than in its fiat currency, the hryvnia. Meanwhile, Ukraine already has a deep talent pool of developers eager to make inroads on blockchain tech. Dutch IT company Daxx put Ukraine as No. 1 for attractiveness in terms of IT outsourcing in 2021 and the best in the world for hiring programmers. Government officials are hopeful that the new law will attract more foreign investment into Ukraine’s burgeoning crypto market, although fluctuating tensions with the country’s less crypto-friendly neighbor, Russia, might put a damper on capital inflows. On Thursday, media reported mortar shells struck a kindergarten in restive East Ukraine, with pro-Russia separatists blaming the strike on Ukrainian forces, and Ukrainian forces pinning blame on pro-Russia separatists. Aside from the fear of conflict, Russia’s economic clout and reluctance over bitcoin may cast a pall over Ukraine’s openness. Russia is still one of Ukraine’s most important trading partners, and the Russian central bank is working on its own digital currency while lobbying for a cryptocurrency prohibition. In January, Ukraine deputy minister of digital transformation Oleksandr Bornyakov told Fortune, “Our supportive approach on crypto certainly stands in contrast with neighbors where politicians propose a ban on the usage and mining of cryptocurrencies.” “I’d want to remind them that crypto regulation, rather than a prohibition, will be more effective.”

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