The global landscape of digital finance is rapidly evolving, and Ukraine is actively navigating its place within this transformation. A prominent figure in the nation’s financial policy, Danylo Hetmantsev, who chairs the Verkhovna Rada Committee on Finance, Taxation, and Customs Policy, has consistently voiced his conviction that cryptocurrencies represent the future. He anticipates a significant expansion in the number of crypto asset owners, particularly once a robust legal framework is established within the country.
Ukraine’s Approach to Virtual Assets
Hetmantsev recently elaborated on Ukraine’s legislative efforts concerning virtual assets. A key bill is currently under development, meticulously adapted to align with Europe’s MiCA regulation. The aim is to ensure its passage through parliamentary readings by year-end, fulfilling an important commitment to international partners. While his committee previously lent unanimous support to the “On Virtual Assets” bill, its progress has reportedly been impeded by the Presidential Office, allegedly influenced by the National Securities and Stock Market Commission (NSSMC).
Navigating Regulatory Authority
A significant hurdle in the path to crypto legalization is determining which governmental body will oversee the market. Discussions primarily involve three potential regulators: the National Bank of Ukraine (NBU), the NSSMC, and the Ministry of Digital Transformation.
Hetmantsev strongly advocates for the NBU, citing its institutional strength and extensive experience in both banking and non-banking sectors. Conversely, he has expressed skepticism regarding the NSSMC’s capacity, particularly highlighting their insistence on requiring re-registration for all crypto assets in Ukraine, even those already authorized by EU or US regulators. This approach, he asserts, is impractical and creates unnecessary obstacles.
A potential compromise involves a divided regulatory model, where responsibilities could be shared, for instance, between the NBU and the Ministry of Digital Transformation. The ultimate decision on this crucial matter rests with the Cabinet of Ministers.
Taxation Framework for Crypto
The proposed taxation model for virtual assets in Ukraine includes a standard personal income tax rate of 18%, complemented by a 1.5% military levy. Recognizing the unique nature of the crypto market, a transitional period is also envisioned, allowing crypto investors to pay a reduced rate of 5% without the obligation to verify expenses.
Hetmantsev acknowledges that a combined tax burden of 23% might encourage activities in the shadow economy. However, he emphasized that the current investment income taxation model aims to strike a balance between maintaining transparency and generating essential revenue for the nation’s defense efforts during wartime.
The Concept of a State Crypto Reserve
The idea of establishing a state-managed crypto reserve has also been discussed. Hetmantsev finds the initiative intriguing but posits that its development falls within the purview of the National Bank of Ukraine. Despite its appeal, he remains cautious about its near-term feasibility, stressing that the foundational virtual assets law must first be enacted. This pragmatic stance suggests a phased approach, prioritizing foundational legal frameworks before exploring more advanced concepts like national crypto reserves. Notably, a draft law proposing the inclusion of crypto assets into the NBU’s currency reserves has recently been registered in the Verkhovna Rada.
Official’s Perspective and Risks
While Hetmantsev personally does not hold crypto assets, he demonstrates a clear understanding of the market’s dynamics. He firmly believes in the necessity of legalizing crypto asset circulation and safeguarding the rights of crypto investors. However, he also identifies key risks associated with legalization, including the potential for traditional market participants to use cryptocurrencies for tax evasion and the current lack of specialized expertise among regulatory bodies.
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