A day after El Salvador accepted Bitcoin as legal tender, Ukraine became the fifth country officially regulating cryptocurrencies. Ukrainian parliament Verkhovna Rada has passed the law, which now awaits the nod of President Volodymyr Zelenskyy. 

However, unlike El Salvador, cryptocurrencies in Ukraine are now legal but not legal ‘tender.’ This means that the new law does not put any cryptocurrency on the same footing as Ukraine’s national currency, the hryvnia. Crypto trading was not illegal in the country even before the legislation, but there were no laws around it. This law pulls crypto exchanges and crypto investors out of the uncertainty and doubt of being in a legal grey area. 

“The development of a new industry will allow attracting transparent investments and will strengthen the image of our country as a high-tech state.”

• Mykhailo Fedorov, Ukraine’s vice prime minister of digital transformation

The bill was introduced in the Ukrainian Parliament on September 8. It now requires the President’s signature to bring the law into force. The law will potentially facilitate the working of crypto exchanges and lay down protections for those who own crypto. The cryptocurrency legislation of Ukraine now has these provisions:

• The law allows the citizens to own, exchange, and trade cryptocurrencies on local or foreign platforms as long as they are registered in Ukraine.
• Those participating in the crypto market will be able to independently determine the value of virtual assets, open bank accounts to settle transactions, and seek judicial protection.
• Crypto service providers will follow the country’s anti-money laundering regulations.
• The new law recognizes virtual assets as both secured and unsecured intangible goods.
• The law mandates the term ‘Financial virtual assets’ to be issued by registered entities.
• Cryptocurrencies will not be accepted as legal means of payment for goods and services.
• The assets backed by digital currency will be regulated by the country’s central bank National Bank of Ukraine (NBU).
• The derivative or security asset will be regulated primarily by the National Stock market commission.

The law spells out terminology that is common in the crypto space. This is important for regulators worldwide since terms such as private keys, digital wallets, etc., are common in the crypto and fintech space today but rarely find a definition in our laws. Ukraine’s legalization of cryptocurrency is proof of the growing popularity of digital currency around the world.