Ukraine’s New Crypto Regulation Bill Moves Forward, Legalizes Taxation of Digital Assets

Ukraine is moving one step closer to becoming one of the most crypto-progressive nations in Europe. Lawmakers in the Verkhovna Rada have voted overwhelmingly in favor of a landmark bill that will both legalize cryptocurrencies and establish a taxation framework for digital assets.

The legislation, often referred to as the Crypto Legalization and Taxation Bill, represents Ukraine’s most significant regulatory step yet toward embracing blockchain technology and digital finance. By recognizing cryptocurrencies as taxable entities, the government is signaling its intent to balance innovation with oversight in a sector that has grown rapidly despite years of uncertainty.

A Landmark Vote in Parliament

On Thursday, the Ukrainian parliament passed the bill’s first reading with 246 votes in favor, reflecting broad political consensus that digital assets should be integrated into the national economy. Lawmaker Yaroslav Zhelezniak, who has been closely following the measure, announced the result on Telegram, emphasizing the significance of this step for Ukraine’s future as a blockchain hub.

“The decision demonstrates Ukraine’s readiness to align with global financial trends and to provide a legal framework for an industry that already plays a major role in our economy,” Zhelezniak said.

The legislation introduces key tax provisions, including:

• An 18% income tax on profits earned from cryptocurrency trading and investment.

• A 5% military tax applied to gains, supporting Ukraine’s ongoing defense efforts.

• A temporary 5% tax on fiat conversions during the first year of implementation, designed to ease the transition into the new regime.

While the bill provides much-needed clarity, some details remain unresolved. Notably, there is still debate over which agency will regulate the sector. The National Bank of Ukraine (NBU) and the National Securities and Stock Market Commission (NSSMC) are both being considered as potential oversight authorities.

Why This Matters

Ukraine has consistently ranked among the top countries in cryptocurrency adoption. According to the 2025 Chainalysis Global Crypto Adoption Index, Ukraine currently holds the eighth spot worldwide, reflecting strong grassroots use of crypto for payments, savings, and decentralized finance (DeFi).

In many ways, Ukraine’s embrace of digital assets has been accelerated by geopolitical realities. Since Russia’s full-scale invasion in 2022, cryptocurrencies have played an important role in both humanitarian aid and military fundraising. Millions of dollars in crypto donations have been used to purchase supplies, support displaced citizens, and even acquire defense equipment.

Legalizing and taxing digital assets marks an important shift from crypto being a gray-area tool of necessity to being a fully integrated part of Ukraine’s official economy. Analysts say this could improve trust, reduce criminal misuse, and attract foreign investors eager for regulatory certainty.

Challenges Ahead

Despite the bill’s progress, there are concerns about enforcement and oversight. A report by the Royal United Services Institute (RUSI), a London-based defense and security think tank, warned that Ukraine has already lost an estimated $10 billion due to crypto-related hacks, fraud, and illicit financing schemes.

The report highlighted Ukraine’s role as a hub for over-the-counter (OTC) crypto activity, which can often bypass regulatory controls. It also warned about the use of digital currencies in circumventing sanctions, particularly in supplying components to the Russian military.

“Ukraine-specific risks are primarily connected with OTC activities in the country, its role as a threat hub, and the role of crypto in funding procurement of sanctioned components,” the RUSI study noted.

This underscores the importance of establishing clear regulatory oversight. Without a designated watchdog agency, critics fear that the bill could create new loopholes even as it seeks to close old ones.

Expert Reactions

Market experts and crypto advocates have welcomed the bill as a turning point, though they remain cautious about implementation.

“This legislation is a game-changer for Ukraine,” said Oleksandr Bornyakov, Deputy Minister of Digital Transformation, who has been spearheading Ukraine’s blockchain initiatives since 2020. “It sends a signal to international investors that Ukraine is serious about digital finance, transparency, and growth.”

Others stress the importance of balancing innovation with risk management. Komodo Platform CTO Kadan Stadelmann said Ukraine’s cautious approach is necessary but overdue.

“The market has already chosen Bitcoin and other digital assets as stores of value. What Ukraine is doing now is catching up with that reality. The challenge will be to ensure proper regulation without stifling innovation,” Stadelmann told reporters.

A Global Trend

Ukraine’s move comes at a time when more governments worldwide are introducing taxation and regulation on digital assets.

• European Union: The EU recently passed the Markets in Crypto-Assets (MiCA) regulation, which creates a unified framework for crypto licensing and compliance across its 27 member states.

• United States: The U.S. has been debating crypto tax reporting requirements, with the IRS intensifying efforts to track capital gains from digital assets.

• Australia: Self-managed superannuation funds (SMSFs) now hold billions in crypto investments, reflecting mainstream integration.

• South Korea and Japan: Both nations have increased oversight of exchanges and introduced tax requirements on crypto gains.

By moving forward, Ukraine is aligning itself with these global financial trends, though its adoption is uniquely shaped by the country’s ongoing war and economic rebuilding efforts.

What’s Next for the Bill

The legislation will now head to a second reading, where lawmakers will fine-tune details such as regulatory oversight, tax enforcement mechanisms, and investor protections. Given the strong support in the first vote, analysts expect the measure to pass its second reading, though amendments are likely.

If approved, Ukraine will join a growing list of nations that not only tolerate but actively regulate and tax digital assets. The move could also pave the way for Ukraine to attract international crypto businesses, potentially turning Kyiv and other cities into hubs for blockchain startups.

The Bigger Picture

The decision to legalize and tax cryptocurrencies highlights Ukraine’s dual goals: to strengthen its economy during wartime and to position itself as a forward-looking digital nation. By legitimizing digital assets, the government aims to channel crypto innovation into sustainable economic growth while ensuring that risks are managed through oversight.

For everyday Ukrainians, the bill may mean higher transparency when using crypto for payments and investments, but also new responsibilities when it comes to taxes. For the global crypto industry, Ukraine’s move is another sign that digital assets are no longer operating in the shadows — they are becoming part of mainstream financial systems.

Source: https://www.coingabbar.com/en/crypto-currency-news/ukraine-pushes-ahead-in-crypto-regulation-know-whats-new

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