Ukraine, cryptocurrency regulation law signed

In Ukraine, President Volodymyr Zelensky has just signed a law legalizing virtual assets, including cryptocurrencies.

The cryptocurrency law in Ukraine

As explained in the official note, the law had been approved by the Parliament last 17 February, before the Russian invasion. 

With the signature of President Zelensky, the cryptocurrency market is regulated and will be subject to the authority imposed by the National Commission for Securities and the Stock Market. 

Specifically, the law:

• Determines the legal status, classification and ownership rights of virtual assets;
• Designates market regulators, i.e. the National Bank of Ukraine and the National Commission on Securities and the Stock Market;
• Creates the conditions for further formation of the legal framework in the virtual goods market;
• Establishes a list of service providers of virtual goods and the conditions for their registration;
• Provides for the implementation of financial monitoring activities in the virtual goods sector.

The National Commission for Securities and the Stock Market is responsible for:

• formulating state policy on the circulation of virtual assets and cryptocurrencies, 
• licensing crypto exchanges and service providers to operate,
• overseeing and monitoring the industry. 

Before the law comes into force, however, amendments to other tax laws of Ukraine are required, which the dedicated ministry is working on. 

The official note reads: 

“The signing of this Law by the President is another important step towards bringing the crypto sector out of the shadows and launching a legal market for virtual assets in Ukraine”.

Cryptocurrencies in the war against Russia

This step comes as no surprise as Ukraine is receiving concrete support through cryptocurrencies. Even before the start of the war against Russia, several non-governmental organizations were receiving substantial support in cryptocurrencies. Now, DAOs and various cryptocurrency fundraisers have sprung up that are helping Ukraine both to provide aid to civilians and to buy weapons to defend itself. 

So the legalization of virtual assets was inevitable and was already in the cards as the country dreamed of becoming a cryptocurrency hub.

Russia and cryptocurrencies to (not) circumvent sanctions

Across the border in Russia, the government is struggling with sanctions from all over the world. The European Union has decided to block crypto assets as well. 

Exchanges are waiting for orders to block accounts belonging to Russian users.  

Some figures help to understand how Russians continue to use cryptocurrencies

According to Elliptic, there are now more than 400 crypto exchange-like services where cryptocurrencies can be exchanged for rubles. The company has also detected as many as 15 million cryptocurrency addresses used in criminal activity with a nexus in Russia. And further, the company explains: 

“We have identified several hundred thousand crypto addresses linked to Russia-based sanctioned actors. This goes beyond those included in sanctions lists to include other addresses that we have been able to associate with these actors through our own analysis. We are actively investigating cryptoasset wallets believed to be linked to Russian officials and oligarchs subject to sanctions. We are collaborating with government agencies and other organizations to ensure that those responsible for enabling the invasion of Ukraine cannot use cryptoassets to hide their wealth”.

In short, the crackdown on the use of cryptocurrencies for activities that are not legitimate or conducted by Russian oligarchs has begun. This confirms the definitive entry of crypto into the war between Russia and Ukraine. 

Update – $65 million raised in cryptocurrencies

Ukraine continues to raise funds in cryptocurrencies. According to the latest data from Elliptic, the funds raised have reached $63 million. Ukraine launched these fundraisers via Twitter by posting wallets, and also got support from some exchanges such as FTX. The crypto people are giving their supportive reaction to the Ukrainia.