The Ukrainian Parliament has published an updated version of the draft law “On Virtual Assets”. The revised bill requires exchanges to obtain government approval, disclose their property rights, and implement mandatory KYC procedures. The document has been criticized by regulators in Kiev, but the government wants the law to be passed before Parliament’s summer recess.
Draft law proposes regulations for cryptocurrencies in Ukraine
The Ukrainian legislature has revised the bill aimed at regulating the country’s growing crypto space. MEPs have tabled a number of amendments since the December first reading vote in the Verkhovna Rada, the Ukrainian parliament. The latest version of the document was released this week by the parliamentary committee on digital transformation, which recommended its adoption.
The bill recognizes a virtual asset as an “intangible good” that has value and is an “object of civil traffic,” Forklog reported. Virtual assets can attest to “property or non-property rights,” including “rights to exercise other civil rights,” the publication said. The draft also differentiates between financial instruments and currency-backed virtual assets.
One of the most important regulations concerns the exchange and exchange of cryptocurrencies. To work legally, they must be approved by the Ministry of Digital Transformation. Crypto service providers are required to disclose their ownership structure and monitor financial transactions to prevent money laundering. The permits are valid for a period of one year. Russian platforms are not allowed to do business in Ukraine.
Another important aspect is the introduction of mandatory identification and verification procedures. As part of the Know-Your-Customer (KYC) process, individuals are required to provide IDs, bank accounts, and information about their electronic wallets. Companies also need to share their business registration numbers. Trading platforms that are not currently doing customer reviews will need to update their onboarding procedures to comply with the law.
Revised law on “Virtual Assets” has met with criticism from Ukrainian supervisory authorities
The drafters of the new law entrusted the Ministry of Digital Transformation, the National Securities and Stock Market Commission (NSSMC) and the National Bank of Ukraine (NBU) with overseeing the implementation of the law. Representatives of the NSSMC and NBU have criticized the draft and, in correspondence with the chairman of the Verkhovna Rada, Dmytro Razumkov, called for further revisions.
The central bank has pointed out that the draft law “On Virtual Assets” is peppered with “considerable loopholes and conceptual errors” that could create legal uncertainty. At the same time, the securities supervisory authority criticized the fact that the law does not clearly define the responsibilities of the individual supervisory authorities and that there are no mechanisms for coordinating regulatory activities in the market.
The NSSMC also insisted that the adopted virtual asset classification and regulatory approach did not conform to best international practice and EU legislation. The agency is concerned about the lack of investor protection and crime prevention texts. The NBU added that while virtual assets are not recognized as legal tender in Ukraine, the law does not specifically prohibit their exchange for goods and services, nor does it restrict trading in other virtual assets or the national fiat currency in any way. The bank fears that this could lead to the creation of a parallel settlement system beyond its control. The Rada Legal Department has requested further changes to the draft.
Deputy Minister for Digital Transformation, Alexander Bornyakov, admitted that the ministry has been criticized by various government agencies who consider the bill to be “insufficiently perfect”. However, he noted that the need to protect the interests of the state is often seen as the need to introduce additional restrictions and inappropriately complicate the business environment. Stressed that the interests of crypto market participants would be the top priority of his department, Bornyakov promised his team to do their best to ensure that the bill ends up on the rada by the last week of plenary, ending July 13.
In recent years, Ukraine has emerged as a generally crypto-friendly travel destination. The country took first place among over 150 nations in last year’s edition of the Global Crypto Adoption Index by the blockchain forensics company Chainalysis.
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