Legalization of cryptocurrencies: a chance for Ukraine and additional billions for the budget

In Ukraine, work continues on the legislative regulation of the cryptocurrency market. The Verkhovna Rada plans to consider a bill on the taxation of crypto assets in the near future. As fintech expert and co-founder of Ukraine’s first fintech ecosystem Concord Fintech Solutions Olena Sosedka told UNN in an exclusive comment, it’s not just about tax revenues to the state budget, but also about predictability and foresight for business.

In 2022, the parliament adopted the main law regulating crypto assets – “On Virtual Assets”. However, it is not currently working, as its launch requires the adoption of a law establishing the procedure for taxing these assets. This refers to the draft amendments to the Tax Code developed by parliamentarians regarding the regulation of virtual asset circulation. Its consideration in the session hall in the first reading is expected in the nearest plenary week. It is quite likely that the MPs will support this document, as the issue of bringing out of the “shadows” tens of billions of hryvnias that circulate annually in digital assets is increasingly actively discussed by government representatives. The state is interested in clear regulation of cryptocurrencies, as this is a new source of tax revenue. But it’s not just about filling the budget from taxation, as Olena Sosedka emphasizes, the legalization of cryptocurrencies will also allow Ukraine to integrate into global financial markets.

Cryptocurrencies have long become an integral part of the global economy. Ukraine is among the top 20 countries in the world in terms of virtual asset usage. But these funds do not work for the state, as they are outside the tax system. If clear rules of the game are created, we will get a double effect – both for the economy and for public finances.

Why cryptocurrency legalization is neededRegulating the use of cryptocurrencies is beneficial not only for the state but also for business.

Firstly, as fintech expert Olena Sosedka explains, the legalization of digital assets protects the rights of users and businesses. Investors receive guarantees that their assets operate within the legal framework, and, accordingly, this opens the way for attracting investments, which will contribute to the development of enterprises and the creation of new jobs.

The legalization of cryptocurrencies will open the way to global investors, banking partnerships, and stock markets.

Secondly, this is an important signal not only for the IMF but also for all international donors and financial organizations that Ukraine is moving according to EU standards and is ready to implement transparent and civilized market regulation rules based on European MiCA standards – Markets in Crypto-Assets Regulation (an act regulating cryptocurrency in the EU).

Tax benefit for the stateThe Ukrainian cryptocurrency market is one of the largest in Eastern Europe. According to specialized associations, the annual volume of the cryptocurrency market in Ukraine can reach 8–10 billion dollars. Even with moderate taxation at 5% of virtual asset transactions, this means tens of billions of hryvnias in additional state budget revenues annually.

If we speak in numbers, with a market volume of 10 billion dollars, even a 5% tax is about 500 million dollars, which is over 20 billion UAH in annual budget revenues. For comparison, this is more than the annual budget of several large regional centers. And these funds can go to finance defense or social programs, reconstruction, infrastructure development.

According to her, the taxation of crypto assets is a new source for financing the defense and reconstruction of our state. “These are funds that are currently ‘flickering’ in the shadows, but can become a real resource for infrastructure, medicine, education,” said Olena Sosedka.

What business needsSimple and clear rules are key to successful legalization of digital assets. These rules may include: a moderate tax rate, absence of double taxation, and simplified declaration.

Global practices show: the clearer and simpler the rules, the more participants are willing to come out of the shadows. Ukraine needs to follow this path to become a financial hub for the region.

Currently, the biggest problem remains the lack of a single agreed-upon taxation system and the distribution of powers between regulators, in particular, the bill that the parliament will consider does not define who will be the regulator of the cryptocurrency market in Ukraine. Of course, this gap can be regulated by amendments to the second reading or left for the Cabinet of Ministers to consider. In any case, as Olena Sosedka emphasizes, the adoption of this bill will be, without exaggeration, a historic step that will open up a wide field of opportunities for the development of the financial and economic sphere.

After all, the introduction of a simple mechanism for declaring crypto assets, combined with the absence of double taxation, will mean the business’s readiness to come out of the shadows. After this, according to the fintech expert, Ukraine will have every chance to become a financial hub of Eastern Europe, which will mean an even greater inflow of funds into the Ukrainian budget.

It should be understood that the crypto market already exists, but without rules. The state only loses, and business operates in a semi-grey area. Therefore, the sooner the parliament adopts the relevant law, the sooner Ukraine will receive additional billions.

If everything remains as is, the risk of fraud, capital outflow, and distrust from international partners will only increase. Regulating the crypto market, however, will ensure transparency, predictability, and protection of investors’ rights.

Fintech expert Olena Sosiedka explained how the market will change after the legalization of cryptocurrencies in Ukraine03.04.25, 09:00 • 200681 view