Rada approves bill on virtual assets

Ukraine’s parliament voted on Sept. 8 in favor of bill
#3637 On Virtual Assets, which determines and sets a regulatory framework on
the issue, circulation and exchange of such assets in Ukraine. The bill sets
the legislative background for the ownership and change of ownership of virtual
assets. It lists the rights and obligations of providers of the services for
such assets’ exchange, transfer, storage and administration. It provides
definitions for unsecured and secured virtual assets, as well as defines
financial virtual assets: backed by currencies (to be regulated by a central
bank) and backed by securities or financial derivatives (to be regulated by the
securities commission).

The bill specifies that virtual assets are not means
of payment in Ukraine and that such assets cannot be exchanged for goods and services.
Instead, they can be exchanged for Ukrainian currency (and other currencies,
based on the central bank’s approval) or other virtual assets.

The Cabinet of Ministers is to create in six months a
special government body that will be responsible for state policy in the
turnover of virtual assets. This body will issue paid permits for provision of
the services related to circulation of virtual assets.

“The legalization of virtual assets creates the
preconditions for launching this innovative market in Ukraine,” Digital
Transformation Minister Myhailo Fedorov commented on Sept. 8. He expects that
international and Ukrainian intermediaries, like crypto exchanges, will soon be
able to officially operate in Ukraine. “The development of this new industry
will attract transparent investment and strengthen the image of our country as
a high-tech state,” he added.

Alexander Paraschiy: The bill is a first step towards the legalization of virtual assets
and creation of official markets for their circulation and exchange. The
functioning of such markets will largely depend on the ability of government
bodies, including the central bank and the state securities and exchange
commission to implement the items written in the bill. As the effect from the
turnover and exchanges of such assets creates additional uncertainties on
domestic money markets, the central bank might be very cautious in
implementation. In any case, such a bill, if comes into force, might create new
segments in financial markets and make some contribution to official economic
growth numbers and the increase of tax base.