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Retail_Trading_Status

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Analysis ID
#206
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Archived
Created
2025-04-12 06:54
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Live

Executive Summary

The retail cryptocurrency trading status in Ukraine is currently Unclear as the Law "On Virtual Assets" is not fully implemented due to pending tax amendments. The National Securities and Stock Market Commission (NSSMC) is designated as the primary regulator, with the National Bank of Ukraine (NBU) overseeing specific aspects. Existing AML/CFT regulations apply, and despite the non-operational status of the main regulatory law, owning, buying, and selling cryptocurrencies by individuals is not prohibited.

Key Pillars

  • National Securities and Stock Market Commission (NSSMC) as the primary regulator for virtual assets (excluding EMTs).
  • National Bank of Ukraine (NBU) overseeing stablecoins (E-money tokens or EMTs) and VASPs involved in crypto-to-fiat exchanges.
  • Compliance with existing Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) regulations, based on FATF standards, including KYC, transaction monitoring, and reporting suspicious activities.
  • Licensing requirements for Virtual Asset Service Providers (VASPs) are pending until the Law "On Virtual Assets" is fully implemented.

Landmark Laws

  • Law "On Virtual Assets" (No. 2074-IX), adopted in February 2022 and signed in March 2022: Establishes a legal framework for virtual assets in Ukraine, defining them as intangible goods and outlining the rights and obligations of market participants; entry into force is contingent on amendments to the Tax Code of Ukraine.
  • Draft Law No. 10225 and No. 10225-1: Draft laws under consideration to amend the Tax Code of Ukraine to establish the rules for taxing operations with virtual assets.
  • NBU Restrictions (April 2022): Implemented capital control measures, restricting individuals from purchasing cryptocurrencies using Ukrainian Hryvnia (UAH) bank cards for cross-border transactions during martial law.

Considerations

Crypto assets are classified as intangible goods under Ukrainian law. Taxation rules are currently unclear due to the lack of specific tax rules for crypto, although general income tax rules apply (18% personal income tax + 1.5% military levy). The pending tax amendments are expected to clarify this. The NBU has implemented capital control measures that affect crypto transactions, restricting individuals from purchasing cryptocurrencies using Ukrainian Hryvnia (UAH) bank cards for cross-border transactions.

Notes

  • In 2014, the National Bank of Ukraine (NBU) classified Bitcoin as a 'money surrogate'.
  • The Law "On Virtual Assets" will take effect after amendments are made to the Tax Code of Ukraine.
  • Retail trading is widely conducted through international exchanges or peer-to-peer (P2P) platforms.
  • The full implementation of the regulatory framework is contingent on the adoption of related tax legislation, which is still pending.
  • Due to the ongoing martial law, the NBU has implemented capital control measures that affect crypto transactions.

Detailed Explanation

The legal status of retail cryptocurrency trading in Ukraine is currently Unclear because the comprehensive regulatory framework outlined in the Law "On Virtual Assets" (No. 2074-IX), adopted in February 2022 and signed by President Zelenskyy in March 2022, is not yet fully operational. This law defines virtual assets as intangible goods and designates the National Securities and Stock Market Commission (NSSMC) as the primary regulator, with the National Bank of Ukraine (NBU) overseeing stablecoins (E-money tokens or EMTs) and crypto-to-fiat exchange services. The Ministry of Digital Transformation plays a coordinating role. A key condition for the law's entry into force is the enactment of amendments to the Tax Code of Ukraine to establish rules for taxing virtual asset operations; these amendments are still pending as of early 2025, despite the registration of draft laws such as Draft Law No. 10225 and its alternative No. 10225-1.

Despite the law's non-operational status, individuals are permitted to own, buy, and sell cryptocurrencies. Retail trading occurs widely through international exchanges and peer-to-peer (P2P) platforms. Virtual Asset Service Providers (VASPs) operate in a gray area, not explicitly illegal but not yet subject to specific licensing and supervision, although existing Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) regulations (based on FATF standards) apply. These regulations require customer due diligence (KYC), transaction monitoring, and reporting suspicious activities to the State Financial Monitoring Service. Offshore platforms serving Ukrainian customers are also expected to comply with Ukrainian AML laws.

Once the Law

Summary Points

Here's a bullet-point summary of the report on Retail Cryptocurrency Trading Status in Ukraine, designed for clarity and quick comprehension:

Retail Cryptocurrency Trading Status in Ukraine: Summary

I. Overall Regulatory Status:

  • Unclear: The legal status is in a transitional phase.
    • Individuals can generally buy, sell, and hold cryptocurrencies.
    • Comprehensive regulatory framework is pending full implementation.

II. Key Regulatory Bodies & Roles:

  • National Securities and Stock Market Commission (NSSMC):
    • Primary regulator for most virtual assets (excluding E-money tokens).
    • Will authorize Virtual Asset Service Providers (VASPs) like exchanges and custodians.
    • Will monitor market abuse.
  • National Bank of Ukraine (NBU):
    • Regulates E-money tokens (EMTs) and VASPs involved in crypto-to-fiat exchanges.
    • Implements capital control measures affecting crypto transactions.
  • Ministry of Digital Transformation:
    • Plays a coordinating role.

III. Key Legislation & Regulations:

  • Law "On Virtual Assets" (No. 2074-IX):
    • Adopted in February 2022, signed in March 2022.
    • Aims to establish a legal framework for virtual assets.
    • Defines virtual assets as intangible goods.
    • Outlines rights and obligations of market participants.
    • Not yet in force: Contingent on amendments to the Tax Code of Ukraine.
  • Tax Code Amendments (Pending):
    • Necessary to establish rules for taxing operations with virtual assets.
    • Several draft laws under consideration (e.g., Draft Law No. 10225 and No. 10225-1).
  • Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Regulations:
    • Based on FATF standards.
    • Apply to VASPs, even before the Law "On Virtual Assets" is fully implemented.
    • Requirements for customer due diligence (KYC), transaction monitoring, and reporting suspicious activities.

IV. Requirements for Compliance (Future, upon full implementation of Law "On Virtual Assets"):

  • Licensing for VASPs: Exchanges, custodians, and other VASPs will require authorization from the NSSMC.
  • Consumer Protection Rules: Specific rules will be established to protect consumers.
  • Market Conduct Standards: Detailed standards will be implemented to ensure fair market practices.
  • AML/KYC Compliance: VASPs must adhere to AML/CFT regulations, including KYC procedures.

V. Notable Restrictions or Limitations:

  • NBU Restrictions (Martial Law):
    • Restrictions on purchasing cryptocurrencies and other "quasi-cash" assets using Ukrainian Hryvnia (UAH) bank cards for cross-border transactions.
    • Purchases limited to foreign currency accounts.
    • Monthly limit of UAH 100,000 equivalent (including P2P transfers).
    • These are primarily foreign exchange control measures.
  • Lack of Specific Tax Rules:
    • General income tax rules apply (18% personal income tax + 1.5% military levy).
    • Lack of specific methodology creates ambiguity.

VI. Recent Developments or Changes:

  • Adoption of Law "On Virtual Assets" (February/March 2022): Significant step towards legalization and regulation.
  • Delay in Implementation: Due to pending tax amendments.
  • Ongoing Consideration of Tax Amendments: Several draft laws are under review by the Ukrainian Parliament.
  • NBU Capital Controls: Implemented due to martial law, affecting crypto transactions.

VII. Practical Situation:

  • Owning, buying, and selling cryptocurrencies by individuals is not prohibited.
  • Retail trading occurs widely through international exchanges or P2P platforms.
  • VASPs operate in a gray area – not explicitly illegal, but not yet subject to specific licensing.
  • Existing AML rules apply.

Full Analysis Report

Okay, here is the comprehensive report on the current status of retail cryptocurrency trading in Ukraine, structured as requested.

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Report: Retail Cryptocurrency Trading Status in Ukraine

1. Current Status: Unclear

2. Narrative Explanation:

The legal status of retail cryptocurrency trading in Ukraine is currently best described as Unclear due to a transitional phase where foundational legislation exists but is not yet fully operational. While individuals are generally permitted to buy, sell, and hold cryptocurrencies, the comprehensive regulatory framework envisioned by law is pending full implementation.

Historical Context & Legal Framework:
Historically, Ukraine had a cautious stance towards cryptocurrencies. In 2014, the National Bank of Ukraine (NBU) classified Bitcoin as a "money surrogate" and warned against its use as legal tender, placing crypto in a legal gray area for years. However, recognizing the growing adoption and potential, Ukraine moved towards legalization and regulation.

In February 2022, the Verkhovna Rada (Parliament) of Ukraine adopted the Law "On Virtual Assets" (No. 2074-IX), which was subsequently signed by President Zelenskyy in March 2022. This law aims to establish a legal framework for the circulation of virtual assets in Ukraine, defining them as intangible goods and outlining the rights and obligations of market participants. It designates the National Securities and Stock Market Commission (NSSMC) as the primary regulator, with the National Bank of Ukraine (NBU) overseeing specific aspects, particularly related to stablecoins (referred to as E-money tokens or EMTs) and crypto-to-fiat exchange services. The Ministry of Digital Transformation plays a coordinating role.

Implementation Delay:
Crucially, the Law "On Virtual Assets" has a specific condition for its entry into force: it will only take effect after amendments are made to the Tax Code of Ukraine to establish the rules for taxing operations with virtual assets. As of early 2025, these necessary tax amendments have not been adopted by the Parliament, although several draft laws (e.g., Draft Law No. 10225 and its alternative No. 10225-1) have been registered and are under consideration. This delay means the comprehensive regulatory regime, including licensing requirements for Virtual Asset Service Providers (VASPs), specific consumer protection rules, and detailed market conduct standards outlined in the Law, is not yet active.

Current Practical Situation:
Despite the non-operational status of the main regulatory law, owning, buying, and selling cryptocurrencies by individuals is not prohibited in Ukraine. Retail trading occurs widely, often through international exchanges or peer-to-peer (P2P) platforms. Ukraine consistently ranks high in global crypto adoption indices. VASPs currently operate in a gray area – while not explicitly illegal, they are not yet subject to the specific licensing and supervision regime mandated by the Law "On Virtual Assets". However, existing general Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) regulations, based on FATF standards, apply, and VASPs are expected to adhere to these.

Regulatory Oversight & Restrictions:
* NSSMC & NBU Roles: Once the law is active, the NSSMC will oversee most virtual assets (excluding EMTs), authorize VASPs (like exchanges, custodians), and monitor market abuse. The NBU will regulate EMTs and VASPs involved in crypto-to-fiat exchanges. This division of responsibilities has been presented and is aligned with EU MiCA standards.
* AML/KYC: Ukraine has incorporated FATF standards into its AML/CFT legislation (since 2020), which includes requirements for VASPs regarding customer due diligence (KYC), transaction monitoring, and reporting suspicious activities to the State Financial Monitoring Service. Offshore platforms serving Ukrainian customers are also expected to comply with Ukrainian AML laws.
* NBU Restrictions (Martial Law): Due to the ongoing martial law, the NBU has implemented capital control measures that affect crypto transactions. Notably, in April 2022, the NBU restricted individuals from purchasing cryptocurrencies and other "quasi-cash" assets using Ukrainian Hryvnia (UAH) bank cards for cross-border transactions. Such purchases are limited to foreign currency accounts and capped at a monthly limit (e.g., UAH 100,000 equivalent per month, including P2P transfers). These are primarily foreign exchange control measures aimed at preventing capital flight, rather than a ban on crypto itself.
* Taxation: Currently, there are no specific tax rules for crypto. General income tax rules apply (18% personal income tax + 1.5% military levy on income derived from crypto sales), but the lack of specific methodology creates ambiguity. The pending tax amendments are expected to clarify this.

Conclusion:
Retail cryptocurrency trading is permitted in Ukraine, and the country has passed a law to regulate the market comprehensively. However, the full implementation of this regulatory framework is contingent on the adoption of related tax legislation, which is still pending. This creates an "Unclear" regulatory status in practice, where trading is allowed but operates without the specific oversight, licensing, and consumer protection mechanisms envisioned by the Law "On Virtual Assets". Existing AML rules apply, and specific NBU restrictions related to martial law impact certain transaction types.

3. Supporting Excerpts:

  • On the Law's Status: "Although the Law [On Virtual Assets] was adopted by the Parliament of Ukraine in February 2022, it is not yet in force. It will take effect once the necessary regulatory acts amending tax legislation are enacted to clarify the taxation of transactions involving virtual assets (incl. crypto)." - Source: CMS Expert Guide to Crypto Regulation in Ukraine
  • On Implementation Dependency: "Звертаємо увагу, що Закон набере чинності лише з дня набрання чинності Законом України «Про внесення змін до Податкового кодексу України щодо особливостей оподаткування операцій з віртуальними активами»." (Translation: "We draw your attention to the fact that the Law will enter into force only from the date of entry into force of the Law of Ukraine 'On Amendments to the Tax Code of Ukraine regarding the specifics of taxation of operations with virtual assets'.") - Source: European Business Association (EBA) commentary on the Law
  • On Current Practical Status: "Ukraine does not have any crypto currency specific related regulation in force; however, it is currently in the process of developing a legal framework to regulate crypto assets..." - Source: CMS Expert Guide to Crypto Regulation in Ukraine
  • On Pending Tax Legislation: "As a result, two competing draft laws are currently in progress, both primarily aiming to address the tax issues in relation to virtual assets and thereby provide a basis for regulating the virtual asset market. Currently, both draft laws are undergoing review by the Taxation Committee of the Ukrainian parliament (Verkhovna Rada) and it remains unclear which one will be adopted." - Source: RUSI Report
  • On Regulatory Roles: "Oversight of the crypto space is primarily shared between three main authorities: National Commission on Securities and Stock Market (NSSMC); National Bank of Ukraine (NBU); Ministry of Digital Transformation. Together, these institutions shape Ukraine's cryptocurrency policy and regulatory infrastructure." - Source: Coinfomania
  • On NBU Restrictions: "Under the new rule, individuals may make cross-border “quasi-cash” transactions only with their foreign currency denominated payment cards. Payments for “quasi-cash” from UAH bank accounts are now prohibited. Furthermore, “quasi-cash” transactions are now capped at UAH 100,000 (approx. EUR 3,250) per month." (Context: Quasi-cash includes crypto purchases). - Source: Sayenko Kharenko Legal Update (May 2022)
  • On Legality of Holding/Trading: "Yes, Bitcoin and other cryptocurrencies are legal to own and trade under the Law “On Virtual Assets.”" (Note: This refers to the legal status defined by the law, even if not fully enforced yet). - Source: Coinfomania FAQ

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