Bitcoin will change Ukraine forever

24.04.2015

It’s a common knowledge that presently Ukraine is facing economical and political crisis, yet, notwithstanding all the difficulties it presents, bitcoin community is quite active there. One may buy bitcoins from a kiosk or a payment terminal in Kyiv and Lviv, and even pay for a cup of coffee with cryptocurrency. Bitcoin Foundation Ukraine is also successfully functioning in Ukraine.

However, some government officials, for example, the head of SBU (Security Service of Ukraine) somewhy consider bitcoin the best means of sponsoring terrorists in the Eastern regions. Anyway, those injustified and unsubstantiated statements seem to have no effect on forthcomint bitcoin integration. And, as it turns out, Ukrainian authorities are much easier to negotiate with as opposed to those Russian.

Cryptocurrency business that now has to abandon Russian jurisdiction, exists and develops in Ukraine on a purely legal basis. Mikhail Chobanian, KUNA Bitcoin Agency CEO and BFU board member, speaks on government attitude towards digital currencies and prospects of Bitcoin in Ukraine.

Goods, services, or stock?

Any state integrating Bitcoin in its economy faces the necessity of providing cryptocurrency with a particular legal status in the first place. According to Chobanian, Bitcoin may be considered digital benefit.

“As for this matter, BFU bases itself on a research by Financial Action Task Force on Money Laundering (FATF) and considers bitcoin a kind of digital benefit. We unambiguously think it’s not money, which is a very bad example. It may be considered a payment system at the outside, but ‘property’ is the most appropriate definition” says Chobanian.

Regulation moratorium

As for regulation of Bitcoin and other cryptocurrencies, Bitcoin Foundation plants itself quite unambiguosly: no regulation for 5 more years and preferrably no taxation for 3 years at least. According to the foundation, “bitcoin should be recognized as a digital benefit and watch where natural market development eventually takes it”.

BFU, however, stresses it that some measures still have to be assumed to prevent money laundering or terrorism financing with cryptocurrencies. According to the foundation, cryptocurrency exchanges should be monitored in the first place. Such monitoring could also dramatically reduce the number of scam players at cryptocurrency market.

Cryptocurrency regulation monitoring could become a great opportunity for particular Ukrainian cities to develop their infrastructure and business. A porto-franco (literally ‘free port’ meaning a tax-free area) zone in Odessa back in the 19th century could serve a perfect example of such policy. It is this porto-franco thing that should take credit for turning Odessa into the most economically attractive and developed cities of its time. Bitcoin deregulation in Ukraine and complete liberty for Bitcoin companies could infuse a new life into particular cities.

Bitcoin in Ukraine

Accoring to Chobanian, government bodies, which includes intelligence service, actively engage new people from IT industry. Currently some people in Ukraine’s law enforcement are aware of what Bitcoin is, how it works, and what prospects the technology involves.

The statement by SBU’s head Valentin Nalivaychenko, Chobanian believes, may be related to the fact that “those specialists have not been heard yet at all the government levels”. Generally the law enforcement poses no hindering to Bitcoin integration in Ukraine.

“There are no problems with SBU, there are some competent officials. K department of the Ministry of the Interior also has well-qualified specialists, so there are no problems with them as well. I hope there’ll be a dialogue and we’ll manage to bottle up all issues related to terrorism and money laundering. As soon as that happens we’ll have a green light on from all security services”.

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However, Chobanian says, there is some misconception of Bitcoin technology at the National Bank of Ukraine, yet BFU hopes to overcome those issues in a matter of time. Subsequent to settling all the matters with goverment entities the community plans to set an enlightenment activity amongs the officials.

It should be noted that despite the NBU statements, and in accordance with laws of Ukraine, Bitcoin cannot be considered a money surrogate. As the Law on the National Bank of Ukraine reads, a money surrogate is any document in a money form distinguished from Ukraine’s money unit (hryvna) issued not by the NBU and designated to effect payments in the economic process. Thus, Bitcoin, as it lacks any material form, cannot be considered a money surrogate. At least, that’s what the law says.

BFU also negotiates with Ukraine’s Ministry of Economic Development to use block chain for the e-goverment project being under development at the time of writing.

“If we manage to weld e-government and bitcoin technology together Ukraine will prosper” Chobainan added.

It also should be noted that according to Google Trends for the last three months, Ukraine’s interest-in-Bitcoin index reached its maximum at 100, while in Russia it comprises 98, and 66 in Belarus.

The first three positions in Bitcoin interest are shared by Donetsk, Dnipropetrovsk and Odessa. At the same time, interest index for ‘cryptocurrency’ query in Ukraine comprises 84.

ForkLog continues watching the development of affairs and Bitcoin integration in Ukraine and other former Soviet republics. Stay tuned.

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Tags: Bitcoin, blockchain, Ukraine