Rada approves bill on virtual assets

9 September 2021

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.