Another Eastern-European country – Ukraine – is taking over regulation of digital money. Not long ago, Ukraine’s neighbor to north Belarus legalized bitcoin and blockchain in order to attract more foreign investors and boost the country’s economy, which is partially dependent on Russia. Russia, in its turn, is preparing the draft bill which will regulate cryptocurrency on the market. It seems that Ukraine doesn’t want to fall behind in this rally.
On Thursday, January 11, the country’s Secretary of the National Security and Defense Council (NSDC) Oleksandr Turchynov urged the government not to turn the blind eye to the development of cryptos. According to the official report, that day the meeting, chaired by NSDC was held and the unregulated in Ukraine turnover of virtual money was discussed.
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Drawbacks of Not Legalizing Cryptos in Ukraine
The Ukrainian government is indeed concerned about the risks that virtual money is carrying. For example, as the bankers and representatives of the law enforcement in the country believe, lack of regulation over cryptos as well as the anonymity of payments can lead to such unpleasant consequence as the use of digital money for:
- legalization of the criminal money
- payment for forbidden commodities (arms and drugs)
- terrorism supply, especially, in the East of Ukraine, Donbas, which is suffering from the war
Turchynov claimed that if the Ukrainian government doesn’t weigh in the issue, the malicious use of virtual money can unravel the very foundation of the Ukrainian economy and even safety.
Ukrainians to Brace for the End of Anonymity and Tax Evasion
Therefore, the relevant Ukrainian watchdogs, law enforcement representatives, central bank and other authorities were ordered to create a working group which will resolve the crypto regulation issue. It is expected that together they will:
- Create legal proposals on the matter
- Determine the state’s virtual money regulator
- Set out the algorithms for observing the flow transactions, using cryptography and identifying people, who make transactions
- Work on the taxation schemes
- Ensure the access to crypto exchanges information for police and its brethren
The Ukrainian government is also looking forward to receiving help from the outer world in the regulation rally.
E-hryvnia: The National Digital Coin to Come
Moreover, the central bank of Ukraine is thinking about the possibility of developing its own cryptocurrency, as the report hinted. Meanwhile, some days ago Ukrainian media, citing the National Bank of Ukraine, explained that the bank is not going to establish its own digital coin but e-hryvnia, the crypto clone of the Ukrainian public currency ‘hryvnia’, based on blockchain technology.
“The National Bank clarifies that the issue is the possible establishment of the electronic hryvnia but not own cryptocurrency,” Ukrainian media outlet Epravda.com.ua cited the central bank of the country.
Having started exploring this possibility back in 2016, the Ukrainian central bank believes that e-hryvnia will minimize the transaction fees and wait time.
At the same time, there are some draft bills on crypto regulation in the Ukrainian parliament, which are awaiting the consideration. However, media reported that the draft bills were not finalized so the whole process is still ongoing.