Legalization of the cryptocurrency market in Ukraine: when will we finally catch up with necessity

I am Artem Lyashanov, a fintech entrepreneur, and I’ve been engaged with the crypto assets market for a long time. Not as a passive observer, but as someone who works with payments and products. As a person who uses opportunities and realizes potential that has been building up for years. Therefore, when the Ukrainian parliament (Verkhovna Rada, if you don’t know) adopted on first reading a bill on cryptocurrencies in early September, I felt that we had taken an important step forward. I am not saying this for the sake of pathos, but simply acknowledging the obvious: the crypto economy already exists in Ukraine. And it needs clear game rules – and I will explain why and how this can change the entire market for the better.

Law basis

Bill No. 10225-d includes amendments to the Tax Code and other acts regarding the circulation of virtual assets. This document finally lays out the cornerstones of the legal status of crypto assets:

• a definition of what virtual assets are;
• an understanding of how to classify them;
• rules are established for how to do transactions accounting;
• what service providers should do;
• transitional tax rules that will apply during the enactment of the law.

It’s not very clear at this point who exactly will become the regulator. Both the National Bank and the National Securities and Stock Market Commission were mentioned in the discussion, but this key issue will clearly be postponed until the second reading. I’m not interested in discussing the political reasons – unlike thousands of experts in Ukraine, I consider myself a layman when it comes to the socio-political landscape.

Why do I think this step was long overdue? Because crypto in Ukraine is not somewhere in the future, but it has flourished in the present for quite some time.. According to Chainalysis, we’re consistently among the top countries in the world in terms of crypto assets – in 2024, we ranked top-6 in the world. This means hundreds of thousands of Ukrainians already use cryptocurrencies, but they do so in a “wild west” format on the global market – without clear rules and protection in Ukraine. Legalization allows this huge segment to come out of the shadows.

The second argument is even more pragmatic. The state budget of a country fighting for attrition war needs stable and understandable sources of revenue, especially given our deficit. The tax rules in the draft law provide for taxation of income from crypto asset transactions at a rate of about 18% + 5% military tax. There is also a preferential transition mechanism. According to moderate estimates, budget revenues could reach UAH 14-15 billion annually. This may not seem like much in terms of the budget, but in the event of a delay, the absence of this money could be considered a loss.

Global context

Plus, don't forget about the cumulative effect. To understand the scale: in countries that have already developed clear regulations and reporting mechanisms, fiscal authorities have tightened control and increased the collection of tax information on crypto transactions. So over time, revenues from this segment have become more significant. In the US, the IRS is consistently introducingrequirements for declaring digital assets and expanding the tools for detecting undeclared income on a large scale. This increases fiscal control over the market.

Another example is the United Kingdom, where HMRC is already implementingthe Crypto-Asset Reporting Framework (CARF) and initiatives with “nudge” campaigns against non-declaration. This allows the collection of systematic data from providers and strengthens tax collection in the future.

In Japan, regulators are reviewingthe tax regime (towards simplification, of course) for digital assets and strengthening market integration into the official financial space. This is also accompanied by changes that could make the tax base more transparent and stable.

Finally, international initiatives – especially the OECD – are creating a framework for the automatic data exchange on crypto transactions between countries, which enhances global fiscal transparency and potentially increases tax revenues across all jurisdictions.

The third issue is security and transparency. Today, users and businesses operate in a gray area: some declare their income, some do not, and some don’t even understand what their tax obligations are. This creates opportunities for abuse and fraud. The law provides legal protection and clear rules, while also opening the door for banks, payment services, and operators to legally cooperate with the crypto industry.

Come out of the shadows? Voluntarily?

Another important point is amnesty. The bill provides for the possibility of legalizing existing assets through a special transition period. This is a chance for people and businesses to come out of the shadows without excessive fines and double standards. If this mechanism works fairly, the 14-15 billion I mentioned earlier will come out into the open. And here it is important to do everything so that users have an urge to take advantage of this opportunity. Because if the state uses too many restrictions, we will get the opposite effect – people will dig deeper into the shadows.

But we must remain realistic. We’re only talking about the first reading. In Ukrainian practice, the second reading can change a document beyond recognition. There’re already risks that the amnesty terms, tax rates, the choice of regulator, or even the procedure of legal entity data access will be revised. In other words, today we have a direction, but far from all the answers.

In terms of operational implications, this is primarily a question of legalizing payments and exchanges for the market. Once operators receive licenses, the banking system will be able to work with them without legal consequences. For businesses and users, this means simpler processes and fewer risks. The tax logic of “pay when you withdraw to fiat” seems reasonable, but it needs to be implemented competently at the reporting level. It’s also important that losses from transactions can be carried forward to subsequent periods – this protects investors, especially in such volatile times.

I want to believe this time we can do it properly. Because the crypto market already exists, and Ukraine simply can’t ignore it. And proper regulation is not just about taxes. It’s about infrastructure, security, and clear game rules. Because the market will change without regulation – and it’s only up to us to ensure Ukraine derives maximum benefit from these changes.