Ukraine Crypto Regulation Stalls Amid Industry Debate on EU Alignment

Ukraine’s journey toward establishing a clear legal framework for virtual assets has been protracted, marked by several legislative attempts. A recent development in late April 2025 saw the Ukrainian parliament’s Finance, Tax, and Customs Policy Committee lend its support to an updated draft law. However, rather than paving a clear path forward, this version has ignited a complex debate within the industry, balancing cautious optimism about aligning with European standards against significant concerns regarding its practicality and potential impact on the market’s future development.

The core objectives of the proposed legislation are to regulate the circulation of digital assets, define their taxation, and protect market participants. Key provisions include setting requirements and licensing procedures for crypto service providers, alongside establishing clear definitions for fundamental terms.

Some industry participants view the bill positively, particularly its alignment with the European Union’s MiCA (Markets in Crypto-Assets) regulation. Kyrylo Khomyakov, Regional Head of Binance in Central and Eastern Europe, Central Asia, and Africa, noted this approximation to the European framework. Bogdan Opryshko, COO of Everstake, a global non-custodial staking provider, echoed this sentiment, describing harmonization with MiCA as a strategically sound decision that could facilitate EU licensing and accelerate Ukrainian companies’ entry into international markets.

Industry Concerns and Criticisms

However, this positive outlook is not universally shared. Maxim Demianyuk, founder of UAHg.io, acknowledged that any legal framework is preferable to none but argued that strict adherence to European standards might not stimulate business growth in Ukraine. He pointed to Ukraine’s challenging institutional landscape, specifically mentioning issues with the judicial system and the banking sector, suggesting these factors might deter crypto companies from choosing Ukraine as a primary jurisdiction.

Alexander Momot, founder and CEO of Peanut Trade, offered a harsher critique, suggesting the bill appears to have adopted the most unfavorable aspects of MiCA’s strict regulation while adding further complications. He posited that the outcome might paradoxically drive a larger volume of crypto activity into the shadow economy, negating any potential benefits from formal regulation.

This concern about market shadowing is shared by Vadym Grusha, CEO of Trustee Plus, who described the current draft as overly complex yet failing to address its stated goals. Volodymyr Nosov, founder and President of WhiteBIT Group, added that the bill’s complexity makes it difficult for a broad audience to understand, potentially hindering the mass adoption necessary for the industry to reach its full potential.

WhiteBIT Group also highlighted specific areas needing revision, such as incorporating measures to exclude market players who served citizens of aggressor nations during wartime. Grusha also criticized the bill’s poor structure and significant gaps in terminology and definitions that fail to align with the nature of virtual assets, potentially rendering it ineffective for certain purposes.

Taxation and Regulatory Ambiguity

Despite the widespread criticism, some positive changes in the tax section were acknowledged. WhiteBIT’s Volodymyr Nosov pointed out the removal of “unacceptable initiatives,” such as the concept of tax agents for crypto operators, and the introduction of a transitional preferential tax regime. The bill outlines a tax rate for individuals on crypto operations at 18% Personal Income Tax and 1.5% military duty, with a reduced rate of 5% for asset sales during 2026.

Vadym Grusha also noted progress in clarifying tax calculations, although the requirement for documented proof of expenses incurred to acquire virtual assets remains. Bogdan Opryshko cautioned that relying solely on individuals to declare income, without effective oversight mechanisms, risks turning the process into a mere formality.

A significant point of contention for almost all business representatives is the uncertainty surrounding the designated regulator. The bill vaguely states it could be the National Bank of Ukraine and/or another body determined by the Cabinet of Ministers. Kyrylo Khomyakov highlighted this ambiguity as a major issue, particularly concerning whether the appointed regulator would have sufficient time to build a team, prepare necessary sub-normative acts, and establish licensing conditions before the law takes effect.

The identity of the primary regulator is seen as critical, as it will heavily influence the ease or difficulty of operations for market participants. Different opinions exist on which body would be most suitable, with some viewing the National Securities and Stock Market Commission as less ideal compared to the NBU or the Ministry of Digital Transformation.

History of Delays and Current Standoff

The crypto business community has long voiced concerns about the time lost due to legislative delays. Volodymyr Nosov recalled that despite a previous law being adopted in 2022, it lacked the political will for implementation, resulting in three years lost while other nations developed and enacted their regulations, becoming attractive hubs for global crypto businesses. He stressed the importance of avoiding past mistakes.

Hopes that the committee’s support would lead to quick adoption in the first reading were dashed. The updated version faced criticism from the National Securities and Stock Market Commission. Subsequently, MP Yaroslav Zheleznyak stated the bill was removed from consideration at the initiative of the Presidential Office, allegedly influenced by the head of the Commission, though the Commission denied involvement in blocking the process.

As of May 2025, the fate of the document remains uncertain, left in a state of limbo.

Impact on Business Strategy

These legislative uncertainties significantly impact business development. Market players have repeatedly expressed willingness to collaborate with lawmakers to facilitate legalization. However, the current circumstances and the high probability of further delays are causing frustration.

Vadym Grusha of Trustee Plus expressed disappointment regarding the continued uncertainty surrounding the virtual assets bill in Ukraine. While his company remains open to participating in working groups and contributing European market experience to refine the legislation, Trustee Plus has decided not to wait for potential operational opportunities in Ukraine. Instead, they have halted market research there to fully concentrate on the EU, where a regulatory framework is already in place.