The Ukrainian crypto market has been in flux and growing fast, underpinned by huge government efforts and key changes in the regulatory environment. This article contributes to an overview of the market, including initiatives by local governments, changes in the regulatory compliance background, major investments, and local key players. All these elements fully open up the view of the contemporary condition and prospects of the cryptocurrency landscape in Ukraine.
The Tax Committee of Ukraine announced its cooperation with the National Commission for Securities and the Stock Market and other regulators to establish some provisions of the Markets in Crypto-Assets in April 2023. MiCA will set clear legal frameworks for cryptocurrencies and crypto companies, which existing EU legislation fails to address. The European Parliament wants this to protect consumers and investors, ensure financial stability, and facilitate innovation in those areas where these crypto-assets can be applied. MiCA will, therefore, come into force on the 30th of December.
In 2020, Ukraine's parliament unanimously voted to legalize and regulate cryptocurrencies in the country, pending the president's approval. Before this move, the status of cryptocurrencies in Ukraine was uncertain; hence one could buy and trade virtual currencies. However, businesses and exchanges that deal with cryptocurrency transactions were constantly under the radar of law enforcement agencies.
In March 2022, Ukraine legalized virtual assets, including cryptocurrencies, its first big step toward cryptocurrency market regulation.
President Volodymyr Zelensky signed a law that places the cryptocurrency market under the scope of the National Commission for Securities and the Stock Market. It counts on a broad reach of issues related to the legal status, classification, and rights of ownership of virtual assets, and the creation of a legal platform for the market of virtual goods. It also establishes activities of financial monitoring in the sphere of virtual goods.
The law is an important step towards the process, although other tax laws are yet to be rewritten before they can come into force.
Draft Law No. 3637 of September 8, 2021, adopted by the Ukrainian Parliament, is more commonly referred to as the law "On Virtual Assets." The latter anticipates the comprehensive regulation of all virtual assets and related issues of ownership, conducting entrepreneurial activity, and circulation, with relevant responsibilities. Interestingly, the term "virtual asset" refers to a broad category of digital assets.
The National Securities and Stock Market Commission, the National Bank of Ukraine, and the Ministry of Digital Transformation of Ukraine are notable regulatory organizations that are actively looking for cryptocurrency solutions in Ukraine.
Association: The Blockchain Association of Ukraine controls and enforces compliance with the laws, regulations, and standards of the cryptocurrency market in Ukraine.
Major Investments in Ukraine
Major investments in the cryptocurrency market of Ukraine include mergers and acquisitions, partnerships, funding, product launches, and service launches.
The Ukrainian chain of pharmacies, now ANC Pharmacy, has partnered with Binance, a cryptocurrency exchange, to offer crypto payments via Binance Pay in January 2023. It is part of the quiet revolution whereby, since the beginning of February, a spate of pharmacies in Ukraine has taken to accepting digital payments amid the ongoing conflict. Accordingly, it would help customers' payments through cryptocurrencies like Bitcoin with the help of Binance's payment platform.
For example, Binance is the operator of leading cryptocurrency and blockchain infrastructure that announced a Binance Refugee Crypto Card in April 2022 for users in Ukraine who are relocating to the EEA countries as a result of the conflict with Russia. This card has been developed in cooperation with Contis and allows displaced people to spend crypto and make purchases at retailers in EEA countries that accept card payments.
Key participants operating in the cryptocurrency market include Softengi, First Bridge, 4IRE, Blaize, Jelvix, SheerChain, NordWhale, EvaCodes, Zfort Group, IdeaSoft.io, Dexlo, Makarenko IT Studio, Wise Vision, OmiSoft, and Distributed Lab.
The cryptocurrency market in Ukraine is expected to reach US$79 million in 2028 from US$47 million in 2023, at a CAGR of 11.35%. The rise is therefore so positive, an indicator that digital currencies are being highly adopted, the development of blockchain technology, and an increase in interest in decentralized finance solutions. Over time, the maturation of the market can attract more investors and innovators and hence consolidate the status of Ukraine in the global landscape of world cryptocurrencies.