Ukraine is taking a bold step towards becoming a crypto hub as it prepares to legalize cryptocurrency by the first quarter of 2025. According to reports, the move comes with a clear caveat: tax exemptions will not be part of the package.
This development was revealed by Danylo Hetmantsev, Head of the Ukrainian Parliament Committee for Finances, Tax and Customs Policy, during the Domestic Investment Opportunities forum recently hosted by Ekonomichna Pravda.
Crypto Legalisation Timeline and Legislative Progress
Hetmantsev announced that a draft law, developed in close collaboration with the National Bank of Ukraine and the International Monetary Fund (IMF), is nearing completion. He mentioned that the draft is expected to be ready after the New Year, and the crypto legalization will be passed after that.
This draft law builds on a milestone in November 2023, when Ukraine’s parliament introduced legislation on taxing virtual asset transactions. The passage of this new bill will mark the final step in creating a regulatory framework for cryptocurrencies in the country.
Similarly, Russia recently introduced a new crypto bill that focuses on crypto transactions. The bill aims to regulate digital assets and ensure compliance with financial laws.
If Ukraine legalizes crypto in 2025, it will join countries such as the United States, Canada, Japan, Germany, Australia, and Switzerland. These nations have embraced virtual assets and implemented rules to manage risks and ensure compliance with tax and financial laws.
The Taxation Model: No Special Privileges
While legalizing digital assets is a significant move, the absence of tax exemptions reflects a cautious and practical approach. According to Hetmantsev, profits from crypto will be taxed under the same model applied to securities. Taxes will only be levied when assets are converted into traditional currency.
This cautious approach aligns with international best practices, ensuring digital assets do not create loopholes in Ukraine’s tax system. Many countries, including the U.S., the U.K., Canada, and Germany, have adopted a similarly cautious approach to the taxation of digital assets.
Ukraine in the Crypto Space
Ukraine has been a prominent player in the global crypto landscape, making consistent strides toward integrating digital assets into its economy.
In 2022, the Ukrainian Parliament passed the “On Virtual Assets” law, which provided a legal definition for cryptocurrencies and recognized them as an asset class. This law laid the groundwork for the current efforts toward full-scale legalization.
Also, the Ministry of Digital Transformation has actively collaborated with international blockchain companies and tech giants to develop a robust digital economy.
During the early days of the Russian invasion, Ukraine embraced crypto donations. This move showcased the practical utility of digital assets during crises. The initiative raised millions to support defense and humanitarian efforts.
As the first quarter of 2025 approaches, all eyes will be on Ukraine as it navigates the challenges and opportunities of becoming a fully crypto-legal nation.
