Ukraine is taking steps towards the legalization of digital assets, planning to introduce new taxation rules. The expected tax on cryptocurrencies could reach up to 10%, as part of a wider adoption of blockchain technology and digital asset tax management to boost the national budget.
Government Regulations and Plans
According to local media reports, the Ukrainian government plans to bring a draft law regarding digital assets to parliament in the coming months. This regulation is expected to be enacted by mid-2025. Ukraine has previously attempted to clarify the legal status of cryptocurrencies, including passing a law in 2021 that recognized their existence; however, it needed alignment with EU standards. The head of the Finance, Tax, and Customs Policy Committee in the Ukrainian parliament, Danil Hetmantsev, stated that the draft law will likely be discussed in the first session by the end of March.
Taxation of Crypto Assets
One of the main points in the regulation is the tax scheme for digital assets. The government is considering a tax rate ranging from 5% to 10%, which is expected to strike a balance between attracting investment and increasing state revenue. At the same time, there is a proposal for a standard tax, including an 18% income tax and a 5% military levy, which could raise the total tax burden to 23%. This uncertainty poses additional challenges in tax policy.
Role of Cryptocurrencies in Ukraine
Ukraine has become one of the most active countries in cryptocurrency adoption. Since the conflict with Russia erupted in 2022, digital assets have played a significant role in financial transactions, including donations for military needs. Blockchain technology is increasingly being used to support various economic aspects amid uncertainty. Despite the widespread use of cryptocurrencies, there is currently no legal certainty for users and industry players. Without clear rules, many crypto companies face development challenges, while the government cannot fully benefit from the tax potential of digital asset transactions.
With the introduction of regulations, Ukraine aims to make the cryptocurrency market more stable and attractive for foreign investors. However, overly strict tax rules might lead to an exodus of crypto businesses to other countries with more favorable conditions for digital assets. Ukraine stands at a crossroads, deciding whether to become a pioneer in Europe in regulating the crypto industry or to create standards that could hinder the growth of this sector.
