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On Sept. 8, Ukrainian lawmakers voted for the bill legalizing and regulating cryptocurrency and other virtual assets in the country. Before, cryptocurrencies have been neither legal nor forbidden in Ukraine because there were no laws that defined their status. Ukrainians could buy and exchange virtual currencies, but local courts couldn’t protect them if something went wrong.

As a spokeperson of the Ministry of Digital Transformation told local media outlet the Kyiv Post, Ukraine plans to open the cryptocurrency market for businesses and investors by 2022. But the parliament first has to pass a set of laws and amend the Tax Code and the Civil Code.

The approved bill is crucial in this process, experts said. Once signed by President Volodymyr Zelenskiy, the law will protect owners of virtual assets and exchange platforms from fraud and determine the cryptocurrency market regulations in Ukraine.

The bill also defines virtual assets, a wallet for virtual currency, and a private key — terms never been used in Ukraine’s legislation.

Although virtual assets are now legitimate in Ukraine, Ukrainians cannot use them as a means of payment or exchange for goods or services. However, Ukrainians can own, exchange, and trade cryptocurrencies using local or foreign exchange platforms registered in Ukraine.

The law allows crypto businesses to work officially in Ukraine and pay taxes here. To register a crypto business, a company needs to prove that it is transparent and has an excellent reputation. The license to start a business costs about $3,100. Crypto businesses also have to declare their activity to the authority for AML/CTF compliance.

According to the law, Ukraine’s Ministry of Digital Transformation, the National Bank of Ukraine, and the National Securities Commission are defined as the main regulators of the virtual assets market. The government also plans to create another regulator focused on crypto companies in Ukraine.

By the passing of the set of laws that regulate crypto and virtual assets, Ukraine wants to make this market more transparent and attractive for investors.

Cryptocurrency is highly popular among Ukrainians, according to Mykhailo Fedorov, Ukraine’s Minister of Digital Transformation. When it becomes legal and safer, more Ukrainians will invest in it, the minister said.

“Only a few countries in the world have legalized crypto assets — Germany, Luxembourg, Singapore. Ukraine will be one of them,” Fedorov added.

Experts see recognizing cryptocurrency as vital for the booming industry.

“It will reduce stereotypical attitudes towards cryptocurrencies and will help them to become normal financial instruments,” said Oleg Kurchenko, CEO of virtual asset exchange platform Binaryx.

However, experts are worried that too many rules could stifle innovation and put pressure on businesses. By Kurchenko’s words, some crypto investors could leave the country because of a lack of trust in state initiatives.

Fedorov believes the new law will change this. “Favorable conditions will allow companies to register in Ukraine, rather than abroad,” he said. “The entrepreneurs will pay taxes to the budget, but will be protected by the state.”

Before, President of Ukraine Volodymyr Zelensky has highlighted the importance of launching a legal digital assets market in his country during a working visit to the U.S. The Ukrainian head of state met with top investors, venture capital funds, and Silicon Valley accelerators, including from the cryptocurrency industry.

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