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Crypto Exchanges& Regulation in Ukraine

Top exchanges in Ukraine by Coincub criteria
Article review author
Jonathan Lea
Ukraine head image

Crypto Country Rating: 6.9/10

6/10
Institutional acceptance
Restrictions on spending bitcoin
8/10
Exchanges & Wallets availability
All leading exchanges available
7/10
Government regulation
Light touch with reasonable tax stance - for buying but not spending
5/10
Defi acceptance
Full on DeFi still a matter of debate
8/10
Financial services
Potential hot spot for crypto investing
8/10
Transparency
Light touch regulation - but big fines for evasion
6/10
Spending crypto
Crypto spending environment restricted
8/10
Banks activity in crypto
Banks looking to actively participate in blockchain technology and crypto investment services

Bitcoin and crypto trading in Ukraine

Spend Bitcoin and cryptocurrency trading in Ukraine

Just like in Russia, you may be able to trade or mine cryptocurrency – and sit on it feeling rich, if the mood takes you – but you won’t be allowed to spend it within the Ukraine economy. Under the new laws, whilst crypto/virtual assets are defined as intangible goods, which can be secured and unsecured, they are not accepted as a legal means of payment and their exchange for other goods or services is not allowed. ‘Financial virtual assets’ must be issued by entities registered in Ukraine – and backed by currencies – which are regulated by the National Bank of Ukraine (NBU), the country’s central bank. You can spend your cryptocurrency outside the country, or buy an English football club like everybody else in the world seems to want to do.

Law and crypto trading in Ukraine

Ukraine is served by leading exchanges and has a population with high volumes of trading and holding cryptocurrency. Unlike its neighbour, Ukraine shows a very friendly face to the world of crypto and openness towards trading. The country has recently approved regulation to facilitate the adoption of cryptocurrencies, even though – as with many countries – the precise definition and legal bearing of cryptocurrency generally is difficult to pin down. Ukraine’s parliament in Kyiv recently passed legislation determining the rules for crypto-activities with a law on virtual assets that gives cryptocurrencies the status of ‘intangible goods’ but not, unlike our old friend El Salvador – the status of legal tender. The laws also regulate the activities and obligations of crypto businesses. Much of its use and exact categorization depends on the circumstances of use and the particular Ukrainian jurisdictions in which those trading activities occur.

Paying tax on my crypto trading in the Ukraine

A draft bill some years back must have given all Ukrainians big hopes when it was proposed that tax on gains in crypto were to be taxed 5% for the first 5 years of activity. That was false hope! The recent law on crypto legalization is awaiting approval of the amendments to the country’s taxation policy towards cryptocurrency transactions, although these changes haven’t come about at the time of writing. Acquiring cryptocurrency is not taxable, but selling it for gains is. The sales transactions of cryptocurrency are deemed to be a profit-making activity and subject to tax payable on gains at the rate of 18%. The liability to pay tax occurs when the profit is received or when the actual money transferred to your formal bank account.

Tax relief, changing residency and gifting crypto coins Ukraine

The government has specified that crypto transactions are not subject to VAT and only the gains over the purchase and sales transactions are taxed. The Digital Ministry has proposed the tax rate for individuals be cut down to 5% but this is not likely to happen. Gifting crypto means you will still have to pay tax on any gains you made prior to gifting and should you change residency, your tax matters will be applicable to your new country of residence

Ukraine crypto mining regulations

Mining crypto is a highly technical and expensive activity at the best of times, involving powerful computers – and lots of energy – but it is legal and proliferates in Ukraine. Ukraine is big on mining with a brace of plants for mining bitcoin, one under construction is being created by the government-owned nuclear plant operator, Energoatom, and a private firm in a multi-million dollar investment. Another is being built in western Ukraine, partly in collaboration with private companies specialising in crypto infrastructure. Both plants are located next to nuclear power plants – so that tells you something about the kind of energy you’re going to need. That single solar panel on your rooftop isn’t going to cut it.

Planning your retirement and investing in cryptocurrency in Ukraine

Ukraine is looking to reap a golden harvest from opening up to the cryptoeconomy, and all activity has been legalized. With the opening up of crypto activity, without the ability to actually spend your cryptocurrencies on anything in the country, it remains to be seen whether or not the investment industry will experience a boom in demand.

Ukraine’s Financial services’ outlook on Bitcoin and crypto economy

Much of the lead taken by Ukrainian banks regarding crypto comes directly from the government’s latest laws applying to cryptocurrency trading, with activities and services coming within central bank supervision. As the legalization of cryptocurrency trading begins to take effect and regulation becomes clearer, however, exchanges, including a whole assortment of cryptocurrency service providers can now begin to tie in with mainstream banks to provide services that customers want. Just as other ambitious countries have become ‘crypto-positive’ the provision of banking services and overseas crypto businesses, could have the desired effect of transforming the Ukraine into something of a financial and crypto hot-spot for investors and a hub for the development of potential blockchain-related services.

Ukraine and DeFi: the latest developments

Central banks around the world are all investigating or trialing some form of digital currency and the newly crypto friendly central bank of Ukraine is also looking to issue its own central bank digital currency CBDC. The country is also fully committed to becoming a blockchain technology advocate and leader.

Crypto security, transparency and compliance in Ukraine

Cryptocurrency exchanges have to acquire permits to operate and be supervised by regulators. To simplify matters, overseas-based trading platforms will only be obliged to meet certain authorized capital requirements. Customer verification is required but it seems to be operated with a much lighter touch as the country seems not to want to over regulate the golden goose.
While new regulatory laws and clearer supervision provides for more transparency, the owness is firmly on individuals regarding tax declarations over their cryptocurrency gains. Evasion carries the threat of prosecution under criminal proceedings. Mandatory fines and confiscation of property are just the start with further fines of 25% of undisclosed tax amounts. Just for the record, a newly created National Service for Regulation of Virtual Assets will issue permits for crypto companies operating in Ukraine with the Ministry of Finance, the central bank and the National Securities and Stock Market Commission (NSSMC) each having jurisdiction over their own areas of responsibility.

Helpful?
FAQ

New to crypto? Here’s our guide!

FAQ Image #1 01 Why Bitcoin? It seems like the buzz around Bitcoin just keeps growing. Bitcoin is a constantly evolving technology with a passionate community. What is it about the digital asset that makes it such a controversial topic and attractive investment?
FAQ Image #2 02 How to Get Started with Bitcoin It can be difficult to get past the technical jargon surrounding bitcoin (BTC) and other cryptocurrencies in order to figure out how you can buy and store them. Beginners can purchase Bitcoin, for example, on many exchanges using fiat currency like U.S. Dollar, Euro or British Pound.
FAQ Image #3 03 Blockchains 101 Blockchains are a type of database where data is stored in blocks that are chained together. As new data comes in, it is entered into a block, which is then chained to the previous block. The Bitcoin blockchain serves as a ledger that records every Bitcoin transaction in history.
FAQ Image #4 04 Bitcoin in the Real World Ok - you’ve found an exchange, bought your Bitcoin, and stored it safely. What’s next? By now you can buy just about anything with Bitcoin if you try hard enough, from Amazon gift cards to an old master painting. You can also convert your BTC to fiat with ATMs, an exchange, and more.

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