Legalization of Cryptocurrencies in Ukraine: Current Status and Prospects

Today, Ukraine stands on the verge of significant changes in the field of cryptocurrencies, which could have a substantial impact on the country’s economy. The virtual assets market, despite its lack of regulation, shows great growth potential. The National Securities and Stock Market Commission (NSSMC) is making significant efforts to implement a legal framework for crypto asset circulation. This could be an important step in forming a transparent and stable economic system.

Use of Cryptocurrencies in Ukraine and Government Losses

As of today, the virtual assets market in Ukraine remains unregulated. However, data published in a report by Chainalysis indicates that the country ranks second in Eastern Europe in terms of the volume of received crypto assets, exceeding $100 billion. This figure points to the high activity of Ukrainians in the cryptocurrency space, despite the lack of clear rules. Since the first quarter of 2024 concluded, there has been a significant increase in the volume of Bitcoin purchases with hryvnia. During this period, this figure reached $882.64 million. Interestingly, the growth in activity began despite the fact that since March 2023, cryptocurrency companies in Ukraine suspended operations with Hryvnia bank cards. At the time of writing, this restriction is still in effect.

The lack of clear regulation and taxation in Ukraine leads to significant losses for the government. Estimates suggest that due to unregistered cryptocurrency operations and their easy use to bypass financial control, the state loses billions of hryvnias in taxes annually. Deputy Prime Minister and Minister of Digital Transformation Mykhailo Fedorov emphasized that the lack of taxation on cryptocurrency transactions not only complicates government financial control but also limits opportunities for budget replenishment.

Prospects for Cryptocurrency Legalization

The National Securities and Stock Market Commission of Ukraine (NSSMC) confirmed that in the first and second quarters of 2025, the final legalization of cryptocurrencies is possible. A statement by Member of Parliament Danylo Hetmantsev about the legalization of crypto assets has received support from the regulator. According to Hetmantsev, the new taxation model that will be introduced does not provide any benefits for cryptocurrency. Taxpayers will be required to pay taxes on cryptocurrencies under the model for taxing securities transactions. NSSMC representative Yuriy Boyko noted that work is currently underway on a new bill being developed in a working group of the Verkhovna Rada Committee on Finance.

This bill is expected to be completed by the end of December 2024. The National Bank of Ukraine (NBU) does not yet recognize cryptocurrency as a legal means of payment, maintaining the hryvnia as the only currency for such operations. NBU Governor Andriy Pyshny stressed the need for legislative regulation of the virtual assets market, as cryptocurrency currently lacks a clear legal status.

It is essential to create transparent and clear rules for the virtual assets market to minimize the risks of fraud and manipulation. The NBU head also noted that the adoption of Law No. 11043 on October 8, aimed at improving the functions of the NBU in state regulation of financial services markets, will help prevent abuse in payment operations.

Pyshny also stated that there is currently no ready legislative solution for regulating the cryptocurrency market that fully satisfies the NBU. Therefore, work on new bills continues, and a critical rethinking of accumulated experience and finding optimal solutions for updating the legislative framework are key aspects.

Challenges for Legislation

Mykhailo Fedorov noted in his comments that the Ministry of Digital Transformation developed a bill for regulating operations with digital assets, but its implementation is delayed due to resistance.

Andriy Pyshny also highlighted that with the introduction of a new limit of UAH 150,000 per month for P2P transfers, unscrupulous individuals may increasingly use crypto assets, which raises risks in the market. In a situation where part of the market operates in the shadows, the government needs to take steps to regulate this sector.

How Ukraine Can Become the Cryptocurrency Hub of Eastern Europe

Despite all the challenges, Ukraine has the chance to become a key player in the cryptocurrency market in Eastern Europe, according to NSSMC head Ruslan Magomedov. A heightened level of public understanding of technology, active interest in innovation, and the growing volume of cryptocurrency transactions indicate that Ukraine is ready for change.

In the context of war, many Ukrainians view cryptocurrencies as an alternative for making international transfers, further underscoring the importance of legislative regulation.

Conclusions

Thus, Ukraine has great potential for the legalization of cryptocurrencies, but certain challenges remain on the way. On the one hand, the active work of the NSSMC and the Ministry of Digital Transformation demonstrates the state's intention to regulate this sector, while on the other hand, existing obstacles may delay the process. However, the establishment of a comprehensive regulatory framework is key to creating a stable and transparent cryptocurrency market in Ukraine, which, in turn, could lead to significant economic benefits for the country.

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