A Ukrainian government focused on cryptocurrencies
After Uruguay earlier this week, another country wants to allow cryptocurrency payments: Ukraine. On the proposal of Oleksandr Bornyakov, Deputy Minister of the Ministry of Digital Transformation, the government could very soon allow payments in digital assets.
This news is not surprising to those who follow the news. The Ukrainian government is indeed taking a positive view of the digital asset sector. At the end of 2019, this same Ministry of Digital Transformation had signed a partnership with Binance. A year later, the Department of Education offered Bitcoin courses to students.
Oleksandr Bornyakov himself has repeatedly touted the merits of blockchain and cryptoassets. In early January 2021, he was working with the Stellar Foundation (XLM) to establish a legal framework for cryptocurrencies in Ukraine. Seven months later, this bill would therefore be the culmination of this work.
👉 To read – Ukraine: government employees hold $ 2.6 billion in bitcoins
Payment authorization, not legal tender
However, although the Ukrainian government is pro-cryptocurrency, it does not yet want to follow in Salvador’s footsteps. If the latter is today the only country in the world to have made Bitcoin (BTC) a legal tender, Ukraine’s only objective is to authorize payments in digital assets. At the moment, the only official currency of Ukraine is the hryvnia (UAH).
These payments would be authorized through financial intermediaries allowing crypto-fiat conversion. To make the bill clearer, Oleksandr Bornyakov takes the example of dollar derivatives. In Ukraine, payments in US dollars are prohibited. On the other hand, it is possible to pay for everyday purchases with a prepaid dollar card and instant conversion during payment.
In the case of payments in crypto-assets, a bank card such as the Binance Card could therefore perfectly do the trick. The digital assets held by the card user are in fact automatically converted into fiat currency.
👉 On the same subject – Ukraine: government employees hold $ 2.6 billion in bitcoins
Regulation of companies in the sector by a specialized body
The law currently being voted on by the Ukrainian parliament would not only allow payments in cryptocurrency. It plans to legislate more broadly in the sector, particularly with regard to businesses.
As a first step, companies operating in the field of cryptocurrencies will have to have a minimum capital and ensure that none of the founders have been convicted in the past by the courts. On the other hand, no special license would be required like the PSAN in France.
Then, this ethics would be controlled by a regulatory body specially dedicated to digital assets. It is important to point out that the organization in question would deal with the crypto-asset sector alone, which could then be a world first. By way of comparison, in France, the Autorité des Marchés Financiers (AMF) regulates both the “traditional” financial sector and cryptocurrencies.
Finally, if this is not addressed by this bill, two other hot topics are currently under study. The first is the taxation of cryptocurrency earnings which would drop from 19.5% to 5%: good news for Ukrainian investors. The second is the creation of a central bank digital currency (MNBC), authorized by law on July 29.
👉 More info on central bank digital currencies (MNBC)
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About the author: Benjamin Allouch
Lawyer specializing in digital law and personal data. He quickly became interested in bitcoin and blockchain technology, and founded the blog bitcoin-blockchain.fr. He is interested in the emergence of blockchain law and the legal consequences of this technology.
All articles by Benjamin Allouch.