A large majority of the Ukrainian parliament yesterday voted in favor of a law that regulates and legalizes bitcoin. The aim of the law is to provide clarity and create a legal framework to protect bitcoin owners and open up the Ukrainian market to the bitcoin sector.

The law provides clarification and legal recognition of bitcoin in Ukraine. This has not been the case until now, which means that bitcoin has been in a legal gray area; it was neither legal nor illegal. Bitcoin owners therefore enjoyed no protection from the law and bitcoin companies were at risk of government intervention.

Ukrainian law enforcement authorities previously viewed bitcoin mainly as a form of fraud, the Kyiv Post reports, leading in some cases to raids and confiscation of equipment.

Bitcoin law

The new law recognizes bitcoin as a digital asset and provides legal definitions of wallets and private keys , among other things . It basically legalizes owning bitcoin and trading it.

The law also describes how bitcoin companies are regulated and taxed. They must register and are placed under the supervision of the Ministry of Digital Transformation and the Ukrainian National Bank. The registration costs are approximately ???????2600.

It is worth noting that bitcoin payments fall outside the scope of the law. That could be a possible next step. For the time being, however, only the official currency of Ukraine, the hryvnia, may be used as a means of payment, Kyiv Post clarifies.

A large majority in the Ukrainian parliament voted in favor of the new law on Wednesday. A total of 276 MPs voted in favor and six MPs voted against.

The law is not yet in force and must first be signed by the president of Ukraine. Tax legislation and the civil code must also be amended. The law is expected to enter into force in the course of 2022.

“Favorable conditions will allow companies to establish themselves in Ukraine, rather than in other countries. The entrepreneurs will pay taxes to the state treasury, but will be protected by the state.” – Mykhailo Fedorov, Ukrainian Minister of Digital Transformation

Ukraine & Bitcoin

Bitcoin has long been arousing interest in Ukraine. For example, the Ukrainian Ministry of Energy proposed last year to use the energy surpluses of local nuclear power plants for bitcoin mining. This would generate new revenues and help to absorb fluctuations in local power consumption.

The plans were followed up in May this year, when the Ukrainian government ordered large-scale data centers and mining facilities to be set up next to nuclear power plants.

Earlier this year, it also emerged that bitcoin is popular among Ukrainian officials. They were required by law to disclose their assets publicly. An analysis by Opendatabot revealed that Ukrainian officials collectively own more than 46,351 BTC, worth around ??1.8 billion at the current exchange rate.

El Salvador’s recognition of bitcoin as legal tender seems to be inspiring politicians around the world to introduce favorable regulations as well. You can read more about it in our previous article.