Ukrainian Parliament to Review a Bill Recognizing Cryptocurrencies a Financial Asset

News and Analysis

Ukraine’s parliament, the Verkhovna Rada, will review an alternative cryptocurrency bill. It’s the second bill focused on cryptocurrencies in the last few days, this time registered by Sergey Rybalka, a parliament member from the Radical Party.

The bill defines cryptocurrencies differently than its predecessor. The National Front’s bill defines cryptocurrency as a “program code,” while the Radical Party’s states it is a financial asset.

“Cryptocurrency is a decentralized digital measure of value, may be expressed digitally, and functions as a means of exchange, value conservation, or an accounting unit based on mathematical calculation, is a result thereof, and has a cryptographic protection of accountancy. For the purposes of regulation, cryptocurrency is a financial asset,” the bill reads.

The bill stipulates that the National Commission for Financial Regulation would control cryptocurrency operations, and the National Commission on Securities would control issuance and turnover of derivatives. For comparison, the National Front’s bill stipulated that both duties would be performed by the National Bank.

Remarkably, the bill stresses stimulation of market development instead of regulation alone. It suggests that cryptocurrency exchanges will have to be registered as financial institutions and have proper licenses. They will be held responsible for operating in violation of license conditions.

Cryptoinvestors, in their turn, can be both legal entities and individuals having relevant expertise and qualification. They will be responsible for any losses that may occur.

“Introducing this category will solve the issue of protecting the investors by means of making professional market actors realize those operations are risky. It will protect regular citizens from possible misuse,” the bill’s author Sergey Rybalka says.

Any individual or company may register as a miner. They will be entitled to use the mined coins at their own discretion without limitations. However, the bill introduces liability for using third parties’ capacities for mining without their consent.

The stimulating measures include reduced power tariffs, and simplified taxation. In particular, no taxes will be applicable to cryptocurrency purchases. A 2% fee will be charged to the benefit of the Pension Fund when cryptocurrencies are converted into hryvnia, Ukraine’s national currency.

Sergey Rybalka stresses that the bill’s provisions are a starting point for a discussion in a relevant committee of the parliament.

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