As many parts of Ukraine continue to face threats from the Russian military, some residents, industry leaders, and government officials are turning to digital assets for help relocating citizens, funding humanitarian aid projects, and delivering supplies. to his own soldiers.
On February 17, exactly one week before Russian forces began their attack on Ukraine, the country’s legislature adopted the draft law on virtual assets. Ukrainian President Volodymyr Zelenskyy subsequently signed the bill, establishing a legal framework for Ukraine to operate a regulated cryptocurrency market.
Ganna Voyevodina, legal director of the Ukrainian cryptocurrency exchange. Kuna, and one of the authors of the bill, told Cointelegraph that the ramifications of the legislation were coming at a critical time, when the country needed legal access to cryptocurrencies.
“Many [funcionarios] of the Ukrainian government have a lot of funds in their accounts, but according to the laws, they could not invest in cryptocurrencies,” Voievodina said. “Now they can exchange, they will have the opportunity to take their funds to buy cryptocurrencies, to invest and buy some businesses and some goods for the Ukrainian army, for the Ukrainian people, because we understand that cryptocurrency is much easier to be invested in any legal asset.”
Following the Russian invasion of Ukraine, crypto users around the world have sent more than $71 million in digital asset donations to government wallet addresses through a recently launched website. Michael Chobanian, founder of Kuna and president of the Blockchain Association of Ukraine, told US lawmakers on March 17 that it only took “about ten minutes” to set up the cryptocurrency donations to the government, while arranging the transfers. of fiat money through the National Bank of Ukraine took about ten days.
“The crypto community made a lot of donations to the government and the people to support them in such bad times that we have faced, and that we could never imagine that we would face,” Voievodina said. “Many exchanges around the world, including Binance, Kuna, including even Coinbase […] helped our country with donations.
According to the Kuna executive, the Ukrainian law could apparently be divided into two laws applied to companies that handle cryptocurrencies and taxes around digital assets. She said the law would be similar to the Financial Action Task Force rules, applied to virtual asset service providers, including digital wallet providers, exchanges, financial intermediaries, and cryptocurrency transfer services in Ukraine. Companies that provide services related to cryptocurrencies have to register with the government and comply with anti-money laundering regulations.
In Ukraine, the National Securities and Exchange Commission and the country’s central bank act as regulators of financial products, including digital assets. According to Voievodina, regulators coordinated with legislators to ensure that the tax law on digital assets was adopted before establishing the regulatory framework. He said that a draft of the tax law suggested that cryptocurrency traders be subject to lower taxes for five years after the legislation is adopted: 5% of annual profits, compared to 18% in many other cases. However, the law is subject to review by the Parliament of Ukraine.
“It was very symbolic that [la ley] be approved just before the war,” added Voievodina.
Although President Zelenskyy could have signed the bill into law quickly even in the absence of the Russian military’s invasion, according to the Kuna CLO, it was “just in time” to simplify the legal framework and allow people to supply goods. for the military using digital assets. Voievodina said Chobanian was “responsible for all funds” donated to the government in cryptocurrencies, which he uses to buy food, supplies or fiat according to requests from the Ministry of Digital Transformation.
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“The war did not change anything, only that people with cryptocurrencies became more visible because this business has more benefits and opportunities to help the country,” Voievodina said. “These people are not enemies to the financial systems, they are friends of Ukraine and can help it. Mainly, the war did not change the world of cryptocurrency; the world of cryptocurrency will help in this war.”
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