Ukraine, the globally leading country in crypto adoption, is building the friendliest crypto jurisdiction in the world, according to Oleksandr Bornyakov, Ukraine’s deputy minister for Digital Transformation.
In a letter published by Fortune, Bornyakov said Ukraine will achieve this status by creating progressive legislation to attract crypto businesses and build the world’s biggest digital economy.
“In Ukraine, we are building a high-tech state by performing several roles at once: experimenter, regulator, and promoter.”
Blockchain and crypto companies will have a central place in the digital economy, supported by adaptive legislation that caters to the “realities of the crypto industry.”
Ukraine’s Incentives For Attracting Crypto Businesses
According to Bornyakov, Ukraine has the advantage of being a tech-savvy nation, progressive in terms of digitalization in various industries, and having the highest cryptocurrency adoption rate in the world. These qualities and progressive legislation will accelerate its crypto-friendly jurisdiction goals.
Ukraine will offer crypto businesses excellent tax opportunities to register their companies in the country. The offer is available to businesses worldwide, except those from the Russian Federation, for political reasons.
“The most likely scenario concerning taxation of operations with virtual assets in Ukraine is an exemption from VAT.”
Furthermore, companies will enjoy operating in an environment where cryptocurrencies have been legalized by an act of parliament. In September 2021, the parliament passed the Virtual assets bill legalizing cryptocurrencies and other virtual assets. Bornyakov pointed out that Ukraine’s regulation is technology-neutral, primarily focusing on regulating economic relations and virtual assets service providers (VASPs).
“We don’t regulate cryptocurrencies and tokens as a technology.”
The bill was submitted to President Volodymyr Zelensky, who returned it to Parliament with a few proposals concerning the primary regulators of the emerging virtual assets markets. According to Bornyakov, the process of submitting and hearing for this law might take several months.
“Future regulation, expected in 2022, will allow Ukrainian crypto companies to work officially with the banking system.”
A CBDC could Benefit the Digital Economy and Crypto Businesses
In addition to legislation, Bornyakov also urged the country’s central bank, the National Bank of Ukraine to become an impactful player in terms of stability, to support the role of crypto in the digital economy.
“It may launch its own digital currency, which would help it attract investments and maintain the stability of the banking system.”
Different types of the targeted companies such as fintech companies, crypto-exchanges, hedge funds, and institutional investors would benefit from a controlled environment as such provided by the involvement of the central bank and a CBDC, Bornyakov concluded.