Ukraine Aims to Tax Crypto Profits, Fight Illicit Finance with 18% Levy

Ukraine’s parliament has taken a significant step toward regulating its rapidly growing cryptocurrency sector by passing the first reading of a bill that would legalize and impose taxes on virtual assets. The proposal, supported by 246 lawmakers, outlines a combined 18% income tax and 5% military tax on profits from digital asset transactions. A preferential 5% tax rate for converting cryptocurrencies into fiat currencies in the first year of implementation is also included, aiming to encourage compliance and transparency [1].

The bill, announced by lawmaker Yaroslav Zhelezniak on a Telegram channel, does not yet determine the regulatory authority responsible for overseeing the market. Options include the National Bank of Ukraine or the National Securities and Stock Market Commission. Zhelezniak emphasized that the legislation is expected to undergo substantial revisions before its second reading, reflecting the evolving nature of the draft [1].

Ukraine’s move aligns with global efforts to bring clarity to crypto taxation. The country ranks among the world’s top eight in crypto adoption, according to Chainalysis’s 2025 Global Crypto Adoption Index, with significant participation in both retail and institutional transactions and a notable position in decentralized finance (DeFi) [1]. The proposed tax framework mirrors recommendations from Ukraine’s financial regulator, which had suggested a 23% combined tax rate in April, excluding certain crypto-to-crypto and stablecoin transactions. This approach brings Ukraine closer to crypto-friendly jurisdictions in terms of regulatory alignment [1].

The passage of the bill is seen as a critical measure to address vulnerabilities in Ukraine’s financial system. Analysts at the Royal United Services Institute (RUSI) highlighted that the country has faced at least $10 billion in illicit crypto-related losses due to insufficient regulation. These vulnerabilities have made Ukraine a growing hub for money laundering and cyber-enabled crime, particularly through over-the-counter (OTC) markets and domestic criminal networks operating under “money mule” schemes [2].

The regulatory urgency is also driven by Ukraine’s efforts to align with European Union standards. As part of its accession requirements, Ukraine must harmonize its crypto rules with EU guidelines by the end of 2025, or face potential downgrades in its international financial standing [2]. The current legislative draft, however, has not yet been implemented due to the absence of tax provisions, despite the adoption of virtual asset legislation in early 2022 [2].

The bill also introduces a classification system for virtual assets, dividing them into asset-backed tokens, e-money tokens, and other virtual/digital assets. These categories aim to provide clarity in regulatory oversight and tax compliance. Additionally, service providers offering crypto-related transactions must register with a supervisory authority and submit annual reports, with non-compliance leading to penalties [3].

Ukrainian officials and industry experts have highlighted the potential economic benefits of the new regulations. Volodymyr Nosov, CEO of European crypto exchange WhiteBIT, noted that the legislative developments open a window of opportunity to attract crypto investments and repatriate foreign assets held by Ukrainian citizens abroad. This, he argued, could play a vital role in revitalizing the economy and modernizing the financial market [1].

The proposed taxation framework marks a pivotal moment in Ukraine’s approach to digital assets. While challenges remain in determining regulatory oversight and finalizing tax rates, the first reading of the bill signals a clear legislative intent to bring order to an increasingly important economic sector.

Source:

[1] Ukraine's Parliament Supports Crypto Tax Bill at First Reading (https://cointelegraph.com/news/ukraine-crypto-legalization-taxation-bill-first-reading)

[2] Ukraine Parliament Passes First Reading of Crypto ... (https://finance.yahoo.com/news/ukraine-parliament-passes-first-reading-102435792.html)

[3] Ukraine Introduces 18% Tax on Crypto Profits, 5% Military ... (https://coinpedia.org/news/ukraine-introduces-18-tax-on-crypto-profits-5-military-levy/)