Sunday, September 29, 2019

New Ukrainian government accelerates plans to legalize cryptocurrencies

Key facts:
The president of Ukraine, Volodímir Zelenski, intends to accelerate the regulatory process.
A Financial Stability Council of the country was created, which will evaluate the sector.

The Ministry of Digital Transformation of Ukraine plans to legalize bitcoin and other cryptocurrencies, according to the plans announced on September 27 by a spokesman of the aforementioned government entity, headed by Mikhail Fedorov, a 28-year-old boy.

The Ministry's plan was explained by one of the entity's vice ministers, Alexander Bornyakov, who was responsible for explaining to the media projects related to cryptocurrencies of the new Ukrainian government.

In that sense, the publication notes that, according to Bornyakov, cryptocurrencies should leave their "gray zone and start paying taxes," a plan that would even cover mining activity. The official also reported on the plans of the new Ukrainian government to transfer public records and documents to a distributed accounting system, administered by the State.

In this regard, it is added that Fedorov wishes to convert State enterprises “into simple, convenient and non-intrusive services, (…) so that when [the citizen] interacts with the State he feels comfortable, just like [when] you order the services of Uber, Booking [.com] or Airbnb », according to the young manager.

This goal of technological update requires the adoption of complex and decentralized systems that the Ukrainian government seems willing to use. According to reports published by other digital media, the process can take up to three years to complete, but eventually the industry built around digital assets should become a legitimate part of the country's economy.

It is expected that during that time Ukrainian legislators will draft and adopt legislation regulating initial coin offerings (ICOs), tokens, cryptocurrency trading and the use of smart contracts.

Accelerating processes

The new president of Ukraine, Volodímir Zelenski, assumed the presidency this year and is leading a series of changes in all sectors of government, as part of an effort to modernize the country. His idea is to make services more efficient, for which he believes it is necessary to increase digital literacy. The project includes the legalization of the cryptocurrency sector.

So far, in Ukraine there is no clear legislation regarding cryptocurrencies. On this issue, the previous government had planned the creation of a regulatory framework for crypto assets, which would take effect in 2021, as said last year.

But now Zelensky seeks to accelerate that regulatory process. For this, the country's Financial Stability Council was recently created. The agency is made up of representatives of the National Bank of Ukraine, the Ministry of Finance, the Deposit Guarantee Fund, the National Securities and Exchange Commission, and the National Financial Services Market Commission.

Prior to that, at the end of 2018 the Ukrainian Parliament had announced that, in that last quarter of the year or the first months of 2019, the Verkhovna Rada would present a law that would recognize cryptocurrencies as financial assets. This law is in preparation since August 2018.

In parallel, since March of last year, the State Monitoring Service (SFMS) established that the country would adhere to the guidelines of the Financial Action Task Force against Money Laundering (FATF). That same year, the National Bank of Ukraine raised the creation of an "electronic version" of its legal currency, using a decentralized system. According to the banking authority, e-grivna would be part of the strategy to reduce the circulation of cash.