- Ukraine’s will become the world-leading cryptocurrency driven digital economy in the next 50 years, deputy minister of Digital Transformation Bornyakov says.
- Ukraine is ahead of most countries in crypto adoption and regulation and innovation.
Ukraine is transforming into the world’s friendliest cryptocurrency jurisdiction by passing legislation that provides attractive opportunities to tech companies.
In an open letter published on Fortune, Oleksandr Bornyakov, Ukraine’s deputy minister of Digital Transformation said that if passed, the expected future regulation will allow crypto companies in the country to work directly with the banking system in 2022.
According to Bornyakov, the goal is to establish a high-tech state with a new digital economy by concurrently performing three roles: experimentation, regulation and promotion.
Our goal is to build the most comfortable and user-friendly country in the world in the next 50 years. To boost the new digital economy, we are also building a top jurisdiction for crypto and blockchain companies.
Bornyakov: Ukraine is tech-savvy
Virtual assets have legal status in Ukraine after parliament passed the bill on Virtual Assets to legalize cryptocurrencies and other digital assets in September. Ukraine prides itself on having one of the world’s earliest, most comprehensive, and quality regulatory framework for virtual assets. As a result, Bornyakov said Ukraine has conquered one of the key issues that hinder crypto adoption, “the creation of state infrastructure.”
The country also implemented a paperless regime in September 2021, meaning that “public authorities will not be able to demand paper documents from Ukrainians. Ukraine is also globally recognized as one of Europe’s most tech-savvy countries, with the world’s fourth-highest cashless payments integration.
Ukraine leads in crypto adoption, so our citizens already know how to work with Crypto assets.
Additionally, popular startups like Grammarly originated in Ukraine, and the country is home to a robust blockchain development environment. World-leading Ukrainian blockchain startups include leading security and infrastructure provider for Bitcoin Network Bitfury, blockchain security consultancy firm Hacken, and digital assets point of sale system Poppy.
Ukraine to offer tax incentives to crypto businesses
According to Bornyakov, the Ukrainian virtual assets market generates a substantial turnover, but the majority of the transactions are conducted in the “gray area.”
This creates potential risks for all players: state, businesses, and users.
To combat this problem and help genuine businesses scale their operations, Ukraine has made great efforts in regulating and legalizing the business process through digitalization. The adoption of digital processes has also become an effective tool in combating corruption in the country.
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For instance, the virtual assets legislation already covers money laundering, terrorist financing and proliferation guidelines provided by the Financial Action Task Force (FAFT). Bornyakov proposes strengthening this legislation to help maintain Ukraine’s reputation as a quality jurisdiction for the cryptocurrency business.
We would like to incentivize crypto companies to register their business in Ukraine by offering them excellent tax planning opportunities.
The September bill has four provisions, definition for basic conceptions and types of services of providers, establishment of a permit system and the addressing of financial monitoring issues.
Bornyakov notes that the regulation is designed to be technology-neutral, meaning that instead of regulating cryptocurrencies and tokens, it focuses on regulating economic relations and virtual assets services providers (VASPs).
Regulating the new domain
According to Bornyakov the main challenge that the country currently faces is determining which regulatory authority will spearhead the new domain. This is after Ukraine’s President Volodymyr Zelensky returned the bill to parliament featuring his proposals on changing regulators of the market.
Two regulators, the Ministry of Digital Transformation and the National Commission of Securities and Stock Market are both sufficiently equipped to become primary regulators, Bornyakov added.
In another twist, Bornyakov proposed the National Bank of Ukraine as another potential huge player in the new market. He suggested that the central bank could even launch its own CBDC to ensure the stability of the banking system in a digital economy.
The tech companies, huge exchanges, hedge funds, and institutional investors that we want to attract need order and a controlled environment in which to conduct their business.
