THE LEGALISATION OF VIRTUAL ASSETS (CRYPTOCURRENCY) IN UKRAINE

On 15 March 2022 the President of Ukraine signed Law of Ukraine “On virtual assets” No. 2074-IX, dated 11 June 2020 (the “Law”). The Law establishes regulatory framework for of the virtual assets (“VA”) sector in Ukraine. The Law will come into force upon adoption of the tax rules for the VA.

The Law introduces the following rules and changes:

• Recognises the VA. According to the Law, the VA may certify property rights and claims. Meanwhile, the VA cannot be used as means of payment in Ukraine and are not exchangeable for goods or services.
• Provides that the VA are subject to legal protection. The title to the VA may arise from the creation of the VA, transaction, judgement, or law. The title is certified by a virtual key.
• Establishes regulatory framework for the VA. The VA sector is regulated by the National Bank of Ukraine (“NBU”) for the secured VA and the National Commission for Securities and Stock Market (“NCSSM”) for all other kinds of the VA. The NBU and the NCSSM must introduce a detailed procedure for transactions with the VA.
• Regulates the activities of the VA professional market participants. The Law determines which VA providers are regulated market participants. The Law establishes a list of transactions with the VA that can be carried out by service providers (e.g., exchange, transfer of the VA, etc.). Service providers must be licensed financial institutions with special permit for the VA business.
• The VA market participants may open special bank accounts for transactions with the VA. Banks involved in such transactions are subject to AML rules and requirements. It ensures prevention of money laundering and confirms Ukraine’s compliance with the best international practices for the VA turnover.

The Law will come into force upon adoption of the amendments to the Tax Code of Ukraine on the tax treatment of VA and related transactions. Currently, Draft Law “On amendments to the Tax Code of Ukraine regarding taxation of transactions with virtual assets” No. 7150, dated 13 March 2022 is registered and pending voting in the Parliament of Ukraine.