A new law that rules about cryptocurrency passed in Ukraine, Law No. 140-IX, will come into force after an amendment to the Constitution of Ukraine in early 2020.
Ukraine is a very prominent region when it comes to cryptocurrencies. However, a new law has been introduced that might change that situation for the worse when the government wants to know a lot more about people who own Bitcoin or altcoins, forces all citizens to reveal how much cryptocurrency they own, in addition to that owned by their close relatives.
Despite effectively its promulgation early next year, Ukrainians are in confusion as there is no definition of the word crypto anywhere in the legal framework of the country.
For the past few years, Ukraine has been an unstable economy and the inflating national currency caused by the war with Russian-backed separatists.
Moreover, Corruption and tax avoidance are rampant are also making things worse for the country’s economy. The government is desperate to clamp down on such activities – especially as Ukraine hopes to join the EU.
With that instability, Ukrainian citizens are looking to a safe hedge to their savings and the top priority is cryptocurrencies, especially Bitcoin.
Cryptocurrencies became popular in the country several years ago, and interest in virtual money is showing consistent growth.
To be clear, cryptocurrency in Ukraine is not illegal, but they currently have no legal status whatsoever. This creates a grey area and a missed opportunity for the government to collect revenue.
Now, the government plans to give them legal status and create a favorable framework for blockchain companies to work in. This would be similar to a Swiss-style Crypto Valley.
The new legislation is an amendment to the Corruption Prevention Law adopted in 2014. Under this, cryptocurrencies are admitted as assets and therefore can be used in financial crimes, including money laundering, fraud, and terrorism. It will come into effect in January.
Changes for Ukraine
The amendment has altered the list of people that would be affected by the Corruption Prevention Law. Along with a few National Bank of Ukraine officers, all salaried executive support service personnel are going to be covered by this law. Furthermore, officers at any company where the government owns at least 50 percent equity stake would also be under the jurisdiction of this law.
In addition, the definition of ‘close relatives’ and ‘family members’ has also been changed. Such that even minors need to be documented on the income tax form, whether they not part of the same household. It’s a bad time to be an underage Bitcoin millionaire in Ukraine.
The crypto community has been aroused in Ukraine’s new law. A discussion topic has been launched on Reddit. Most people are bewildered when they have to event report their close relatives’ holdings.
A Redditor commented that the new law will have a negative impact because Ukraine will be lost wealthy citizens who hold cryptocurrency as they will emigrate to another country that is more welcoming, and will take their crypto wealth with them to spend in the local economy of the other country.
However, the Ministry of Digital Transformation of Ukraine recently signed a memorandum of understanding (MoU) with Binance, it may not be long before Ukrainian citizens are given more clarity on the legal status of cryptocurrencies in the country—including how they should be considered for tax purposes.
Turn the Country into a Blockchain Hub
Early this month, the Ukrainian government, led by President Volodymyr Zelensky announced that it would soon be legalizing cryptocurrencies in the country. The aims are to receive income tax and in a bid to crackdown on corruption, which makes the crypto sector of the economy more transparent.
The plans are comprehensive and go way beyond merely giving cryptocurrencies a legal status in Ukraine. The government intended to deploy blockchain throughout state structures and beyond, Mikhail Fyodorov, the leader of Zelensky’s digital electoral campaign said.
Zelensky intends to roll out blockchain initiatives in Ukraine. He also wants to set a global example of how to correctly implement and regulate the technology. Especially, creating and transparency for industry and politics.
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