A month ago, Ukraine’s parliament passed a bill to legalize cryptocurrency, preparing a framework for the regulation and management of cryptocurrencies like Bitcoin and Ethereum. Today, the country’s president, Volodymyr Zelensky, signed into law that bill, named “On Virtual Assets,” which establishes a legal framework for the country to operate a regulated crypto market.
According to reports coming out of Cointelegraph, Coindesk and other digital asset-focused outlets, crypto exchanges and firms handling digital assets will now be required to register with the government to operate legally in Ukraine, and banks will be allowed to open accounts for crypto firms.
The law also reportedly empowers Ukraine’s National Securities and Stock Market Commission with the ability to determine the country’s policies on digital assets, issue licenses to businesses dealing with crypto, and act as a financial watchdog. (Indeed, Ukraine’s parliament previously passed a law legalizing cryptocurrency back in September, but President Zelensky vetoed the bill soon afterward, saying the country couldn’t afford to stand up a new regulatory body for managing crypto.)
The law “on virtual assets” was signed today! Now crypto is legalized in Ukraine. Thank you, President @Zelensky for the support. We believe that crypto industry offers new economic opportunities. We will do our best to bring the bright new future closer as soon as possible.
— Alex Bornyakov (@abornyakov) March 16, 2022
If you thought crypto was already legal in Ukraine, you have plenty of company. Even without formal regulation, Ukrainians, Russians and Venezuelans (in that order) had become among the active retail users of digital currencies by the fall of 2020, according to the blockchain analysis outfit Chainalysis.
At the time, Chainalysis’s head of research told Coindesk a few trends were driving Ukraine’s rise to the top, including a “really tech-native population,” and “industrious startup environment.” (Coindesk also noted that there is also more cybercrime activity in Eastern Europe than in other regions, which likely also played a role in driving so much trading volume.)
The types of regulations that were just passed into law have taken on new urgency with Ukraine receiving at least $100 million in crypto donations in the weeks since Russia invaded the country and began killing soldiers and civilians alike, prompting an estimated three million people to flee the country of 42 million. (NPR just likened the number of Ukrainian refugees who have fled to Poland alone — roughly 1.8 million — to the population of Warsaw.)
With the new law in place, Ukraine’s first crypto exchange, Kuna, will no longer be limited to helping the country spend the donations directly with crypto-friendly suppliers but to convert crypto to much-needed fiat. In the meantime, the country has also partnered with the Bahamas-based exchange giant FTX to convert crypto contributions to Ukraine’s war effort into fiat for deposit at the National Bank of Ukraine.
More specifically, as reported on Monday by Coindesk, FTX and Kuna and a staking platform called Everstake have partnered with Ukrainian government officials to launch a donation website for users that is called called Aid for Ukraine and accepts donations in Bitcoin, Ether, Tether, Polkadot, Solana, Dogecoin, Monero, Icon and Neo “to support people in their fight for freedom.”
Whether it’s true that the initiative represents the “first instance of a cryptocurrency exchange providing a conduit for crypto donations to a public financial institution,” as Everstake has since stated, we don’t know, but it’s probably safe to say it’s among the first.
Certainly, none of this is happening the way that Ukraine officials expected just a few short months ago, when the country was profiled in the New York Times under the headline, “The Crypto Capital of the World.”
“The big idea is to become one of the top jurisdictions in the world for crypto companies,” Alex Bornyakov, deputy minister at Ukraine’s years-old Ministry of Digital Transformation, told the outlet for that story in November, before the unimaginable happened.
“We believe this is the new economy, this is the future, and we believe this is something that is going to boost our economy.”