Ukraine legalized cryptocurrency on Thursday, as the country has been receiving millions of dollars in donations in cryptocurrency aimed at helping the country in the wake of the Russian invasion.
Ukrainian President Volodymyr Zelensky signed the bill called “On Virtual Assets,” legalizing cryptocurrency, on Thursday, one month after the Ukrainian parliament passed the law.
The bill effectively creates framework for the introduction of cryptocurrency such as Bitcoin and Ethereum into the country’s economy, something which was not accounted for before.
It will allow Ukrainian banks to work with cryptocurrency firms, with the bill further asserting that it will consider holdings of cryptocurrency of equal importance to holdings of the country’s original currency, called the Hryvnia.
Cryptocurrency firms must also register with the government to continue handling the digital currency.
Ukraine creates legal framework for cryptocurrency
According to the bill, Ukraine’s National Securities and Stock Market Commission will serve as the country’s regulating body for the cryptocurrency market.
Mykhailo Fedorov, Ukraine’s Vice Prime Minister and Minister of Digital Transformation, stated on social medis that the bill will “bring the cryptosector out of the shadows.”
He also noted that cryptocurrency served as an important source of income and support for Ukrainian troops fighting the Russian invasion, writing: “With the beginning of the war, cryptocurrencies became a powerful tool for attracting additional funding to support the Armed Forces of Ukraine.
“In more than three weeks of war, the Crypto Fund of Ukraine has raised more than $54 million in cryptocurrencies,” he noted. Some sources estimate the figure could even amount to $100 million.
Many Ukrainians faced with the Russian invasion rushed to purchase cryptocurrency to prevent losing their money in the event that the country’s regular currency lost value or the economy collapsed.
Before the law was passed, there was simply no government provision for the digital currency, leaving holders vulnerable. This bill will allow for greater government oversight in the cryptocurrency sector, which may result in strong protections for citizens as well.
Although not previously regulated in the country, Cryptocurrency was incredibly widespread in Ukraine even before the war with Russia began. Holdings of cryptocurrency in Ukraine were actually some of the highest in the world.
In November, The New York Times wrote a story about cryptocurrency in Ukraine entitled “The Crypto Capital of the World,” in which Alex Bornyakov, deputy minister of the Ukrainian Ministry of Digital Transformation, is quoted as saying:
“The big idea is to become one of the top jurisdictions in the world for crypto companies…We believe this is the new economy, this is the future, and we believe this is something that is going to boost our economy.”