Ukraine is the fifth country in as many weeks to lay down some ground rules for the cryptocurrency market, a sign that governments around the world are realizing that bitcoin is here to stay.
In an almost unanimous vote, the Ukrainian parliament passed a law legalizing and regulating cryptocurrency. The bill was set in motion in 2020 — and now goes to President Volodymyr Zelensky’s desk.
Until now, crypto in Ukraine existed in a legal gray area.
Locals were allowed to buy and exchange virtual currencies, but companies and exchanges trading crypto were often closely watched by law enforcement.
According to the Kyiv Post, authorities tend to take a combative stance when it comes to virtual money, viewing it as a “scam”, raiding crypto-related businesses and “often using expensive equipment for no reason at all.” to seize”.
For example, in August, the Security Service of Ukraine (SBU) blocked a network of what they called “clandestine cryptocurrency exchanges” in the capital Kiev. The SBU claimed that these exchanges facilitated money laundering and afforded transaction anonymity.
The new legislation also spells out certain fraud protections for those who own bitcoin and other cryptocurrencies, and in a first for the Verkhovna Rada, lawmakers have made an effort to define the core terminology in the world of crypto. If signed by the president, virtual assets, digital wallets and private keys are terms that will be enshrined in Ukrainian law.
Unlike El Salvador’s move this week to use bitcoin as legal tender, Ukraine’s crypto law does not facilitate the rollout of bitcoin as a means of payment, nor does it put it on an equal footing with the hryvnia, the country’s national currency.
However, today’s vote by the former nuclear power is part of wider push from Kiev to lean into bitcoin.
According to the Kyiv Post, the country plans to open up the cryptocurrency market to businesses and investors by 2022. Top state officials have also touted their crypto street cred with investors and venture capital funds in Silicon Valley.
During an official state visit to the US last month, President Zelensky spoke of Ukraine’s nascent “legal innovative virtual asset market” as a selling point for investment, and Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation, said the country was modernizing its payments market so that its National Bank could issue digital currency.
But for bitcoin backers like Jeremy Rubin, Ukraine’s new law and political promises like this aren’t much.
“Ukraine’s improved legal status for bitcoin is a commendable symbolic move that moves us towards a world that universally respects individual rights,” said Rubin, CEO of bitcoin R&D lab Judica. “But it is only symbolic – bitcoin does not seek permission or forgiveness in its mission to protect persecuted communities from unjust governments.”
Last domino to fall
Ukraine joins a long list of countries that are converting bitcoin into national law.
This week, El Salvador became the first country to adopt and maintain both bitcoin and legal tender on its balance sheet. President Nayib Bukele has essentially tied his political fate to the outcome of this nationwide bitcoin experiment.
Two weeks ago, Cuba – a notoriously conservative government still established in traditional Marxist ways – passed a law to recognize and regulate cryptocurrencies, citing “reasons of socio-economic importance”.
Last month, the US proposed rules around crypto brokers in its $1 trillion infrastructure account, and a new German law now allows funds previously unable to invest in crypto to allocate up to 20% to virtual currencies like bitcoin.
Panama appears to be next on deck. The Central American country is kicking a draft of its own cryptocurrency law.
This list is hardly exhaustive – it just seems to be the latest pattern of dominoes falling as more governments recognize the staying power of cryptocurrencies like bitcoin.