Ukraine Legalizes Crypto Amid Influx of Donations

Cryptocurrencies have been a surprisingly strong source of relief for Ukrainians amid the ongoing conflict caused by Russia’s invasion. With the crypto community standing firm behind the war-torn country, it now appears to be reciprocating.

Ukraine Legalizes Crypto Amid Influx of Donations

Two weeks ago, Ukrainian President Volodymyr Zelenskyy took a bold step towards crypto legalization, establishing a proper framework that will govern the use and operation of the assets in the country.

An Official Framework To Guide Crypto Activities

In an official announcement, Ukraine’s Ministry of Digital Transformation confirmed that President Zelenskyy had signed a crypto legalization bill. Titled “On Virtual Assets,” the bill had first been adopted by the Verkhovna Rada - Ukraine’s legislative arm - in February. It directs all crypto exchanges and companies handling cryptocurrencies in Ukraine to register with the government if they hope to keep their operations. At the same time, it opens a legal link between Ukraine’s crypto industry and its banking space.

As the newly signed law directs, all crypto operations in Ukraine will now be overseen by the National Securities and Stock Market Commission (NSSMC). The agency, which oversees the country’s capital markets, has been tasked with ensuring proper financial stability in Ukraine and the correct implementation of the government’s monetary policies. Now, its job will include crypto oversight as well.

The NSSMC will be in charge of issuing licenses to businesses dealing with crypto and will generally be the new industry’s watchdog. Zelenskyy’s bill also added that Ukraine’s Ministry of Finance would work towards changing the country’s civil and tax codes to accommodate cryptocurrencies and build a framework for paying taxes with the assets.

“The signing of this law by the president is another important step towards bringing the crypto sector out of the shadows and launching a legal market for virtual assets in Ukraine,” the Ministry of Digital Transformation explained in the announcement.

Everyone’s On The Same Page

It is laudable to see that Ukraine has finally made the move to establish a crypto framework. One of the richest and largest among the former Soviet states, the county has been a growing crypto market for years. However, the government hasn’t had a smooth road to crypto regulation.

Back in September 2021, President Zelenskyy rejected a crypto legalization bill and sent it back to the nation’s parliament as he was dissatisfied with some of its positions. The bill had already gotten support from Ukraine’s parliament, but Zelenskyy rejected it because he wanted the NCSSM to become the crypto industry’s regulator.

The bill at the time proposed that crypto be regulated by the Ministry of Digital Transformation regulating cryptocurrencies, while the NCSSM would be in charge of regulating assets backed by securities and central bank digital currency (CBDC) issuance would have been regulated by the National Bank of Ukraine.

Zlenskyy’s proposal left CBDC issuance and oversight in the hands of the National Bank, but the President requested that the NCSSM be left to handle everything else crypto-related.

Right now, it is unclear why Ukraine’s parliament decided to go along with the President. However, the crypto industry will definitely be having a sigh of relief now that crypto is officially legal in the country.

An Important Role To Play

Crypto has been a huge relief for Ukraine since the conflict in Russia began. Less than 24 hours following the invasion’s start on February 24, many had donated crypto to support humanitarian efforts in the country as well as its military. At the time, the National Bank explained that it had limited cash withdrawals, pegged its currency’s foreign exchange level, and even suspended the issuance of electronic money. So, crypto became the perfect source of relief for many still in the country.

Just a few days before the crypto bill was signed into law, Kuna - one of Ukraine’s biggest crypto exchanges - launched a crypto donation platform along with FTX, Everstake, and the Ministry of Digital Transformation. The platform allows people to make donations in several cryptocurrencies, and its website shows that donations have crossed $67 million - about 33.5 percent of the platform’s goal of $200 million.

All in all, crypto donations to Ukraine have soared past the $100 million mark and are now quickly approaching $200 million. With the conflict still looking like it will rage on for a little while, Ukraine will have to lean hard on crypto to help out. Now, Ukrainians and foreigners looking to transact in crypto have a framework to guide their actions.

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