The regulatory status of cryptocurrency mining in Ukraine remains somewhat vague even after the recent passage of the Virtual Assets Law. However, according to a leading advisor on crypto affairs in the Ukrainian parliament, the minting of digital coins is not prohibited, if not regulated.
Changes to the Ukrainian Tax Law Regulating Bookkeeping for Crypto Mining Companies
The mining of digital currencies is outside the scope of the newly passed legislation of Ukraine intended to regulate transactions in cryptocurrencies in the country. Various accounting issues related to crypto-related activities, including mining, will be addressed in upcoming tax code changes, a key adviser to the Verkhovna Rada, the Ukrainian parliament, told Forklog.
Konstantin Yarmolenko, who heads an advisory team for the bipartisan proxy group Blockchain4Ukraine, further noted that, according to the recommendations of the Financial Action Task Force on Money Laundering (FATF), the mining of cryptocurrencies should not require a license. Yarmolenko is also the founder and CEO of the NGO Blockchain4ukraine.
The Virtual Assets Act introduced a licensing regime for crypto service providers in Ukraine. For example, cryptocurrency exchanges and other platforms that work with digital assets require approval from the Ukrainian Ministry of Digital Transformation in order to continue to operate in accordance with the law.
In the absence of specific regulations, the minting of digital currencies is not prohibited in Ukraine, with the exception of cases where operators of crypto farms illegally connect their hardware to the power grid. The Security Service of Ukraine (SBU) is tracking such miners and has closed mining facilities in various regions of the country this year.
The law “On Virtual Assets”, which the Rada passed in second reading on Wednesday, will come into force after the legislature has made the necessary changes to tax legislation. Yarmolenko announced that the drafters of the changes plan to introduce a 0% VAT rate on all virtual asset operations, with the exception of the sale of specialty equipment and hardware cryptocurrency wallets.
The crypto law was voted in first reading in the Rada last December and revised this year before the draft was submitted for final adoption. The law defines virtual assets as intangible goods and distinguishes between secured and unsecured digital assets. Cryptocurrencies fall into the second category.
Decentralized digital currencies were denied legal tender status in Ukraine. However, the country’s deputy minister for digital transformation, Oleksandr Bornyakov, noted in a recent interview that Ukrainians can not only keep and trade digital coins legally, but can also issue crypto through instant conversion into Ukrainian hryvnia through the services of regulated intermediaries.
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