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Source: Hive Tech
At about 11:00 p.m. Beijing time on March 16, the official Twitter of Ukraine's Digital Transformation Ministry announced that Ukraine has legalized the crypto industry, and President Vladimir Zelenskiy officially signed a "law on virtual assets", overseas and domestic crypto asset companies will operate legally, and banks will open accounts for crypto companies.
The law, signed by Zelenskiy, which was passed by Ukraine's Supreme Parliament on Feb. 17, establishes the legal status, classification and ownership of virtual assets, and defines matters such as the State Securities and Stock Market Commission as the market regulator.
"The law creates conditions for Ukraine to launch a legal market for virtual assets." The official website of the Ministry of Digital Transformation of Ukraine publishes this sentence. Virtual assets (crypto assets) provided substantial assistance to Ukraine, which was mired in the Russo-Ukrainian War.
Since Ukraine began accepting donations of crypto assets on February 26, the country has so far received nearly $100 million worth of crypto asset donations, including Bitcoin (BTC), Ethereum (ETH), US dollar stablecoin (USDT) and even Dogecoin (DOGE), which have provided for the military needs of the Ukrainian armed forces.
Before the war, Ukraine was already interested in including the crypto industry in compliance management; during the war, Ukraine unexpectedly received a lot of aid from crypto assets, and such a "two-way rush" opened up another space for the crypto industry to develop.
Ukraine will fully launch the virtual asset market
"Ukraine has legalized the crypto industry – the president signed a law." On the evening of March 16, Ukraine's Ministry of Digital Transformation published the news on its official website and announced it through an official Twitter post.
According to the announcement of the Ministry of Digital Transformation of Ukraine, the Law on Virtual Assets of Ukraine signed by President Zelenskiy establishes the legal status, classification and ownership of virtual assets; determines that the market regulator is the State Bank of Ukraine and the State Securities and Stock Market Commission; creates conditions for the further formation of the legal field of the virtual asset market; determines the list of virtual asset providers and their registration conditions; and stipulates the implementation of financial control measures in the field of virtual assets.
In addition, as the regulator, the National Securities and Equity Market Commission will formulate and implement national policies in the field of virtual assets; determine the order of turnover of virtual assets; issue licenses to virtual asset service providers; and exercise regulatory and financial supervision over this area.
The announcement also said that so far, the Ministry of Culture has been developing the legal field in this area, working with industry representatives to develop a contour law. At present, the Ministry of Finance is also actively revising the Ukrainian tax law and civil code to fully launch the virtual asset market. The signed law enters into force on the date of entry into force of the amendment to the Tax Code of Ukraine, which deals with the tax nature of virtual asset transactions.
The bill of the Ukrainian Virtual Assets Act is actually a revised version, an earlier version of which was introduced last September, but president Zelenskiy requested a revision, which was eventually voted for by 272 members of Parliament and passed by Ukraine's supreme parliament on February 17.
Ukrainian officials have legalized the crypto industry
Even before the bill was passed, crypto assets had never been outlawed in Ukraine, and the country was even a major consumer of crypto assets. According to an analysis by blockchain data service Chainalysis in 2020 and 2021, ukraine had the highest per capita use of crypto assets in the world in 2020 and remains the fourth highest in 2021.
Unlike the Central American country of El Salvador, which directly incorporated Bitcoin into the fiat currency system, Ukraine has opted for a more moderate approach to crypto asset acceptance – bringing the crypto industry into full compliance management in the formulation and reform of laws.
As Ukraine's Deputy Prime Minister and Minister of Digital Transformation, Khailo Fedorov, said on the day of the adoption of the bill on February 17, "The new law offers additional opportunities for business development on the mainland." Foreign and Ukrainian crypto companies will be able to operate legally, while Ukrainians will have easy and secure access to the global virtual asset market. Market participants will receive legal protection and the opportunity to make decisions based on public consultations with government agencies to invest in new asset classes in a transparent mechanism."
The Russo-Ukrainian war increased the space for the development of the crypto industry
The Ministry of Digital Transformation of Ukraine has publicly stated that Ukraine is one of the top five countries in the world in terms of the number of crypto asset users, there is a special blockchain developer association in the country, and the number of local crypto startups is growing. The country has been working to advance compliance in the crypto industry since last year.
Arguably, the legalization of the crypto industry in Ukraine was a matter of time, and the Russo-Ukrainian war likely accelerated the process.
On February 24, war between Russia and Ukraine broke out. Two days later, Ukraine opened a crypto asset donation channel, announcing the donation addresses of BTC, ETH and USDT. Unexpectedly, crypto donations have been continuously entered into official addresses, including popular public chain assets Solana (SOL), Polkadot (DOT), and even MemeCoin Dogecoin (DOGE) in addition to the types of assets that are publicly accepted.
On March 11, two weeks after Ukraine received the donation, alex Bornyakov, deputy minister of digital transformation in the country, said that the total amount of crypto assets donated was close to $100 million. Remember, the EU's humanitarian aid funding plan for Ukraine is 90 million euros (included in the 500 million euros package), equivalent to 99.366 million US dollars.
Crypto asset aid to get into Ukraine faster than fiat. On a conference call, Bornyakov said that in the event of the war, "the National Bank was not really operating, and crypto was helping to perform fast transfers, with results almost immediately obtained."
Crypto donation purposes announced by the Ministry of Digital Transformation of Ukraine
On March 12, the deputy minister revealed on Twitter the whereabouts of the crypto donations, "invested in Ukraine's military needs." According to him, the funds have provided the Ukrainian army with 5,500 bulletproof vests, 500 bulletproof vests, 500 helmets, 3,125 thermal imagers and optics, 60 walkie-talkies, as well as 3,427 medicines and more than 400,000 packed lunches.
In the wake of Ukraine's demand, crypto assets have unexpectedly played a charitable role in this war, and although it has not yet been able to prove to be a reliable stored value or payment tool, this war is likely to bring development opportunities to the crypto industry.
Michelle Ritter, CEO of Silicon Valley tech company Steel Perlot, cited the example of social media, "The pivotal moment of social media came in 2011, when videos, tweets and other posts from Libya, Egypt, Yemen, Syria and Bahrain triggered the Arab Spring... Right now...... We find ourselves at a similar turning point (using cryptocurrencies)."
Bridgewater Hedge Fund told clients this week that the Russo-Ukrainian war was the first major event in which cryptocurrencies became part of the war, "these short-term dynamics coincide with structural changes in the cryptocurrency market that we believe will self-reinforce as adoption by major institutional investors increases and the surrounding ecosystem deepens."
Nowadays, the crypto industry has been legalized in Ukraine, such as the exchange of crypto companies can obtain a license to operate in Ukraine, banks will open accounts for crypto companies, Ukraine is an important market for consumers of crypto assets, such conditions for some participants in the crypto industry is a rare development environment.
There are not many countries in the world that have included crypto assets in regulation, and there are many countries that have adopted a comprehensive ban policy, the crypto industry is destined to develop step by step in many games, and Ukraine's "two-way rush" with the crypto industry has added a new space to this emerging industry, as the announcement of the country's announcement of the Virtual Assets Law, "The law is another important step to bring the crypto industry out of the shadows and launch a legal market for virtual assets in Ukraine."