Ukraine wants to legalize bitcoin and other cryptocurrencies, and that way remove it from its current unclear ‘gray area’. The country’s minister of Digital Transformation Alexander Bornyakov calls this a top priority for the Ministry. In addition several state registries will be moved to a blockchain-based network, Bornyakov told Liga.net.
The efforts from Bornyakov are part of a broader change happening in the country. Deputy Prime Minister for Digital Information Mikhail Fedorov wants to make the country as efficient as service providers like Uber, Booking.com and AirBnb. “When you interact with the state, it should feel comfortable”. Fedorov told the Ukrainian Truth last week.
Fedorov is on the same side as Bornyakov. They want to move crypto assets from their grey area, and make them legally recognized under state law. Legalization of bitcoin and other crypto assets is important for the Ukraine. This will benefit the collection of taxes, of course. President Volodymyr Zelensky wants to speed up the process, making Ukraine a hub for blockchain innovation.
There are also some other things to mention about Ukraine’s passion for bitcoin and crypto. It looks like the country wants to increase taxes on miners. Just like Venezuela and Belarus the eastern European country wants to get financial gain from crypto mining income. Whether they will do this by taxing income or increasing electricity costs is not yet known.
Ukraine’s bitcoin plans announced last year
In November 2018 the Ukrainian government revealed plans to establish regulatory frameworks for the legalization of crypto in the country. The plans are part of an initiative to acknowledge cryptocurrency as an emerging technology. The new policies need to be in place by the end of 2021. Exchanges need to comply with anti-money laundering laws.
At that same time the government announced plans to regulate the crypto mining industry. Firstly they want to start the taxation of cryptocurrencies in 2020. Secondly they had plans to do this by recognizing cryptocurrencies as an asset class. Finally the government wanted crypto mining taxes to be five percent.
Crypto mining in the Ukraine
Until now cryptocurrency mining has always been a grey area, and there weren’t any real taxes on these activities. Additionally electricity is quite cheap, making Ukraine a popular destination for cryptocurrency miners.
Also published on Medium.