Ukraine set to legalize crypto by 2025 under strict regulations

Ukraine intends to legalize cryptocurrencies by early 2025, according to Danylo Getmantsev, Chairman of the Verkhovna Rada Tax Committee, but the legislation will not include any tax breaks.

The bill is currently under consideration and is expected to be finalized by early 2025 in cooperation with the National Bank of Ukraine (NBU) and the International Monetary Fund (IMF). The bill's main goal is to regulate digital assets while ensuring fiscal oversight.

Contrary to previous speculation about the possibility of introducing tax breaks, the legalized system will have standard tax rules typical for securities trading, meaning that all profits from cryptocurrency transactions will be taxed upon conversion to fiat currency.

The decision to legalize cryptocurrencies in Ukraine will adhere to global standards and help turn the country into a potential hub for regulated digital asset trading in Eastern Europe.

Legislative work on the bill

A special working group is finalizing a bill on the legalization of cryptocurrency activities, which, according to Getmantsev, should be ready for the first reading in parliament in the first quarter of 2025.

This legislation should regulate operations with digital assets, focusing on financial stability and anti-money laundering (AML) measures to create a transparent and legally secure framework for businesses and investors who deal with digital assets.

During the conflict between Ukraine and Russia, the legalization of cryptocurrencies can provide Ukrainians with regulated access to financial support, protect their assets from inflation, and facilitate cross-border transactions without relying on traditional banking systems, which can operate intermittently during wartime. Cryptocurrencies are already used for humanitarian aid, donations, and financial support during crises.

The new legislation also coincides with the rise of decentralized finance (DeFi) in Eastern Europe, which has already received more than $499 billion in cryptocurrency between July 2023 and June 2024, according to research from analytics agency Chainalysis.

No Tax Exemptions

Getmantsev clarified that cryptocurrency revenues will be subject to capital tax when converted to fiat currency, adding that the committee is “cautious about tax exemptions, as they can be used to evade taxes in traditional markets.”

The committee’s approach is intended to limit the risks of tax evasion while ensuring that revenues from crypto-related financial activities are used for the benefit of the country and its government.

Morocco to Legalize All Cryptocurrencies

While Ukraine is seeking to regulate digital assets, other countries are taking similar steps. In particular, despite banning digital assets in 2017, Morocco plans to legalize all digital currencies, with the country's central bank, Bank Al-Maghrib, drafting a law to regulate cryptocurrencies.

The head of the Moroccan central bank, Abdellatif Jouahri, said that the "draft law" is now "in the process of being adopted," which was announced at the same time as Bitcoin's price surge. Bank Al-Maghrib is also exploring the possibility of creating a central bank digital currency to assess how it could "contribute to certain public policy objectives."