The government in Kiev intends to legalize cryptocurrencies and comprehensively regulate the fintech sector as part of a new public policy developed by the economy ministry.
The process may take up to three years to complete but eventually the industry built around virtual assets should become a legitimate part of the country’s economy.
Parliament to Adopt Laws for ICOs and Smart Contracts
The new regulatory concept will be implemented in two stages.
The legal status of cryptocurrencies, trading platforms and other entities dealing with virtual assets must be determined in 2018 and 2019.
By the end of next year, the Ukrainian government will analyze the market to identify trends and outstanding issues in order to put forward adequate proposals to regulate the whole sector.
According to the document prepared by the Ministry of Economic Development and Trade, the next stage, 2020-2021, would involve recognizing cryptocurrency wallet providers and custodial platforms as “subjects of primary financial monitoring.” The status is typically granted to traditional financial institutions such as commercial banks and insurance companies.
During that time, Ukrainian lawmakers are expected to draft and adopt legislation regulating initial coin offerings (ICOs), tokens and the use of smart contracts, Forklog reported. A number of bills have been filed in the Verkhovna Rada, Ukraine’s parliament, since last year but very little progress has been made toward their adoption.
The first three drafts from last fall were meant to regulate the circulation of virtual coins, stimulate the cryptocurrency market and amend the Ukrainian tax code to regulate the taxation of profits related to virtual assets. In the last couple of months, two bills introducing tax breaks for businesses and individuals dealing with cryptocurrencies have been proposed by Ukrainian legislators from different political parties.
Companies to Gain Access to Banking Services
In an announcement published on its website this week, the economy ministry expressed confidence that the implementation of its regulatory concept would allow cryptocurrency companies to gain access to banking services and attract more capital through regulated token sales. The ministry noted that due to the legal uncertainty, these businesses face several difficulties, while the industry remains largely part of the shadow economy.