Ukrainian President Signs Law ‘On Virtual Assets’

A law has been signed by the President of Ukraine, VolodymyrZelenskycalled ‘On Virtual Assets’, which is meant to regulate the crypto space in the country. This approval of the law comes, as Ukraine is increasingly depending on crypto donations for dealing with humanitarian issues and for funding its defense efforts amidst the Russian invasion. The bill is aimed at establishing rules that will govern crypto transactions in Ukraine. Thanks to the new law, crypto platforms will be able to offer their services in the country, which has been using digital assets for dealing with the consequences of the military assault by Russia.

On Wednesday, the Ministry of Digital Transformation said in a tweet that Ukraine had given legal status to the crypto community. This means that both local and foreign crypto exchanges will be able to operate legally in Ukraine and banks will also be permitted to open accounts for crypto companies. The department, which has been playing a key role in raising funds in the form of digital assets, disclosed the details. There are three main categories in which virtual assets have been divided under the new law. First off, there are cryptocurrencies, such as bitcoin, which are placed in the ‘unsecured’ category.

The ‘secured’ virtual assets are the second category, which comprises of profit-bearing security tokens. The third group is known as ‘financial’ virtual assets and this one comprises of central bank digital currencies (CBDCs), stablecoins, and financial instruments like tokenized stocks. Last year in September, the VerkhovnaRada had adopted the draft. However, in the next month, the Ukrainian president had returned the draft and ordered some amendments pertaining to regulatory bodies in the country. The Ukrainian Parliament had taken his suggestions into account and had passed the bill in mid-February of this year.

The law had to be signed by Zelensky within 10 days, but Russia had launched their military invasion, resulting in a delay. The virtual assets law had recommended that a special regulatory body be established for cryptocurrencies, but the idea was not acceptable to the Ukrainian head of state. He had noted that doing so would result in additional spending and this would cost the budget. The lawmakers were in agreement with Zelensky over this point and had removed oversight responsibilities of the digital ministry, which eventually resulted in the law being revised.

As per the amendment, the National Bank of Ukraine (NBU) and the National Securities and Stock Market Commission (NSSMC) will act as crypto regulators in the country. The former will be responsible for the supervision of circulation digital assets that are backed by other currencies, while the latter will be responsible for oversight of the rest. Crypto service providers will be issued permits by the commission and a register will be maintained. It will also be responsible for identifying violations and implementing financial sanctions. Crypto owners will also be able to enjoy judicial protection under the new law. The law will be put into effect after the Tax Code of the country is updated.