Ukraine’s Parliament Backs Draft Law to Legalise, Tax Crypto and Virtual Assets

Ukraine's parliament took a significant step towards crypto regulation on Wednesday, as the first reading of the bill titled ‘On Virtual Asset Markets' was approved by lawmakers. The bill proposes that profits from virtual assets will be taxed at 18 percent, while a 5 percent tax will be imposed on fiat conversions in the first year. Peer-to-peer swaps and small earnings below the minimum wage would remain exempt under the proposed legislation. The National Bank of Ukraine (NBU) will oversee the bill and will have the authority to inspect, freeze assets, and demand full disclosures.

Ukraine's Proposed Tax Framework Could Unlock Billions Lost to Crime

The country is one of the highest on the global crypto adoption index, and lawmakers hope the bill (via lawmaker Yaroslav Zhelezniak's Telegram channel) will assist in generating new tax revenues and battling illicit activities. According to the Royal United Services Institute (RUSI), the country could recover up to $10 billion (roughly Rs. 88,000 crore) lost to crypto crime and money laundering. This potential revenue stream could be one of the reasons why Ukraine's parliament is looking to formalise crypto and tax the sector. 

The new bill is a follow-up to the earlier law on Virtual Assets passed in 2022, which is yet to be enforced due to political tensions. During the ongoing conflict with Russia, Ukraine has relied on crypto for financial settlements, donations, and cross-border capital flows, making prohibition impractical. Instead, the proposed framework aims to curb schemes such as money laundering and rug pull exchanges that reportedly cost millions of dollars each month. 

On a global level, Ukraine also aspires to join the European Union (EU), aligning with the EU's Markets in Crypto Assets (MiCA) framework. This legislation will assist Ukraine in harmonising with European financial standards related to crypto. The second reading of the proposed legislation is expected to introduce several changes, according to Zhelezniak. Lawmakers will also need to clarify which agencies will oversee virtual assets to help both in compliance and international investor confidence. 

Industry experts such as Volodymyr Nosov, a member of the Diia.City United Strategic Council and the president of WhiteBIT Group, and the RUSI report publishers have pointed out that this law could be a game-changer for Ukraine in global crypto markets. Legal clarity could encourage exchanges, fintechs, and blockchain projects to establish operations in the country, while strong oversight might also improve transparency. For now, the country's first steps move in the direction of treating crypto as a legitimate asset and attempt to reclaim billions of dollars that have slipped through its economy.