09.12.2021

Ukraine legalizes cryptocurrency and mining with a tax rate of only 5%

In Ukraine, in the second reading, a bill will be considered that will legalize cryptocurrencies. In Ukraine, it will be possible to pay with cryptoassets

In Ukraine, it is planned to levy a tax on income from cryptocurrencies in the amount of 5%.

Mining in Ukraine is a completely legal activity that does not require additional regulation. 

In Ukraine, in the second reading, a bill will be considered that will legalize cryptocurrency and digital hryvnia. If it is adopted, the owners of cryptoassets will receive several benefits:

  • Regulation of the cryptoindustry.
  • Legal protection of digital assets.
  • The ability to legally exchange cryptocurrencies.
  • Ability to declare cryptocurrencies.
  • The ability to pay with cryptocurrencies.

If now all these operations are taking place in the so-called “gray zone” (not prohibited, but not allowed), then after the adoption of the bill, working with cryptocurrencies will be completely legal. A whole market for intermediary services is also expected to emerge.

Cryptocurrency as a means of payment

In a conversation with the Ministry of Finance, Deputy Minister of Digital Transformation of Ukraine Oleksandr Bornyakov noted that after the adoption of the bill, Ukrainians will even be able to pay with cryptocurrencies. However, this will not be the recognition of a new class of digital assets as a means of payment. Bornyakov allows acquiring operations.

“Payments in dollars on the territory of Ukraine are not allowed, but you can pay with a dollar card. At the moment of payment, an instant conversion into hryvnia is carried out. The bill says that companies will provide similar services on the territory of the country, so Ukrainians will be able to pay with cryptocurrencies in stores, ”Bornyakov said.

He also spoke about the future work of cryptocurrency exchanges in Ukraine. They will be required to obtain permission to provide services. Bornyakov stressed that it was a permit, not a license. To do this, it will be enough to prove the presence of the required amount of capital and the absence of persons from the sanctions lists in the list of founders. You will not even need to register a legal entity on the territory of the country.

As for the requirements, exchanges will definitely force verification. However, this is not a whim of Ukrainian regulators, but international requirements.

“Virtual assets are the future for both Ukraine and the whole world. In 10-15 years, some countries may completely abandon paper money. Therefore, transparent and fully regulated activities are beginning to be actively practiced today, ”Bornyakov said.

What about taxes? 

At the moment, legislators are actively working on the text of the bill for further amendments to the Tax Code. The submission of the document is scheduled for September.

Features:

  • No VAT.
  • Income tax will be levied on the difference between the purchase price and the selling price of the cryptocurrency.
  • The tax rate is only 5%.

There is a possibility that the rate will be raised in the final version of the bill. Discussions are still ongoing.

What about e-hryvnia?

Bornyakov has a positive view of the creation of e-hryvnia and highlights the key advantages:

  • Simplification of money transfers;
  • The ability to use smart contracts. For example, you can set limits on the spending of social benefits;
  • Better control over emissions;
  • Tracking government spending by journalists.

As for the timing of the issue of e-hryvnia, they are not yet available.

What about mining? 

Mining in the bill is not affected in any way. However, Bornyakov noted that the authorities consider the mining of cryptocurrencies to be an absolutely legal activity that does not need additional regulation.

Bornyakov also touched on the topic of tokenization of assets from the real sector of the economy. The bill says that tokenization is allowed. But there is no specifics.

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