Ukraine has joined the league of several other nations that are headed towards legalising crypto, by recently legalising Bitcoin as one of its virtual assets. This proposal has been put forth by Ukrainian president Volodymyr Zelenskyy who has imposed a law that has made crypto legal in this armed republic. It was on 17th February 2022, that ‘Bitcoin legalisation in Ukraine’ took place. Originally, the bill was vetoed in October 2021, when a new regulatory body established that the costs of crypto were too steep.
What does this law regarding Bitcoin legalisation in Ukraine say?
The law on cryptos was made to allow foreign and Ukrainian crypto exchanges to operate legally in Ukraine. This is perceived as an important step towards developing the virtual assets market in the country and will create a regulatory framework for the Ukrainian crypto market. It will also regulate the crypto-assets market under the sponsorship of the National Securities and Stock Market Commission (NSSCM). It will also incur fines on frauds for violations and illegal investments.
The Ministry of Finance would also work to amend Ukraine’s Tax and Civil Codes to launch the virtual assets market. Ukraine’s vice prime minister and digital transformation minister, Mikhail Fedorov, has called this new law a business development opportunity for the country.
Following the Bitcoin legalisation in Ukraine, foreign and Ukrainian crypto companies will be able to operate legally in its market, while Ukrainians will securely access the global virtual assets market.
What triggered the enactment of this law?
Ukraine is the recipient of $100 million (Rs 76,200 crore) of crypto donations from all over the world for its relief efforts during its war against Russia. The donations have also been used to support funding weapons for the Ukrainian armed forces by Zelenskyy.
Following the legalisation day, a sum of $15 million (Rs 1,143 crore), including the donations, was sent in Bitcoin and Ether. On 4th March, Ukraine’s Deputy Minister of Digital Transformation Alex Bornyakov said that the money was spent on military equipment.
The Ukraine cryptocurrency legalisation has prevailed as more and more countries favour crypto after El Salvador became the first country to adopt Bitcoin investment. In the next section, we will discuss the role crypto has played in Ukraine during the war against Russia.
What is the role of crypto in Ukraine during the Russian war?
Crypto became one of the mediums of donations for the Ukrainian government when Russia’s war started. An analysis made by the Center for Strategic and International Studies (CSIS) has inferred that cryptocurrencies offer Russian and Ukrainian people value and a medium of exchange to reduce the humanitarian sanctions and war costs.
On 26th February, the Ukrainian government started soliciting crypto donations publicly using Bitcoin and Tether expanding the capacity to accept cryptos in 70 forms including non-fungible tokens (NFTs), with the help of the country’s largest crypto exchange Kuna.
Ukraine got a donation of $10 million (Rs 7,620 crore) from Binance, a global crypto exchange, to aid in the Ukraine humanitarian crisis. FTX, a Bahamas-based cryptoexchange, had also announced the donation of $25 (Rs 1,905) to each Ukrainian. Justin Sun, head of the Tron Dao platform, also donated $200,000 (Rs 1.5 crore).
The changes occurring in Ukraine have been reflected in other countries too. The virtual assets developments in Ukraine are implied on two fronts. First, the Ukrainian government has received crypto donations in millions to utilise these funds. Secondly, the access to traditional banking for the Ukrainian people has become restricted, and the crypto has been letting them access the funds.
Cloud technology implementation by the government agencies
With the virtual assets law passed, the NSSCM and the National Bank, under the leadership of Fedorov, started a legal market for Bitcoin in Ukraine. The Verkhovna Rada, Parliament of Ukraine, also approved the cloud services law. This bill aims to process and protect data using cloud-computing technology, provide cloud services, and determine the public authorities’ specifics of cloud services, and more efficient use of public resources with the introduction of new technologies.
According to Fedorov, the law will accelerate Ukraine’s entry into the top cloud service providers of the world, such as AWS, Google Cloud, and Microsoft encouraging the fabrication of more and more data centres. He has also shared his take on cloud adoption across various Ukrainian agencies. He believes that it will eventually reduce corruption risks, reduce costs for the budgets, and also accelerate the operation of state authorities’ innovations.
The Digital Development Ministry’s decision to expand the “virtual assets” market will place Ukraine as an innovative digital country in Europe’s financial sector.
Final takeaways,
- Ukraine legalised Bitcoin on 17th February 2022.
- The law on crypto will create a regulatory framework in the Ukrainian crypto market.
- Ukraine received donations of $10 million after the war against Russia.
- Government agencies implement cloud technology for making efficient use of public resources.
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