Ukraine's Crypto Push Aims to Turn Chaos into $10B Gain

Ukrainian lawmakers have passed the first reading of a bill aimed at legalizing and taxing cryptocurrency, marking a significant step toward regulating the digital asset sector in the country. The legislation received 246 votes in favor, as reported by Yaroslav Zhelezniak, a key parliamentarian involved in the process. The bill introduces a 18% income tax and a 5% military tax on profits from virtual assets, with a preferential 5% tax rate on fiat conversions in the first year after the law is implemented. This aligns with recommendations from Ukraine’s financial regulator and reflects the country’s growing recognition of cryptocurrency as a legitimate economic asset [1].

Ukraine, already a prominent player in the global crypto space, ranks eighth on Chainalysis’s 2025 Global Crypto Adoption Index. The country shows high levels of centralized and decentralized finance (DeFi) value received, particularly in Eastern Europe. Experts suggest that the proposed legislation could help attract crypto investments and repatriate foreign assets held by Ukrainian crypto enthusiasts, which may contribute to economic revitalization and market modernization. Volodymyr Nosov, CEO of WhiteBIT, emphasized the potential of the bill to position Ukraine as a crypto-friendly economy [1].

The draft legislation defines virtual assets as digital property on a blockchain but explicitly excludes them from being used as legal tender in Ukraine. Instead, they will be classified under movable property under civil law. The proposed law also includes a requirement for service providers involved in virtual asset transactions to register with the relevant state authority and submit annual transaction reports. Non-compliance will result in penalties, including late submission fines and registration defaults [2].

The urgency of implementing crypto regulation is underscored by a report from the Royal United Services Institute (RUSI), which estimates that Ukraine has lost at least $10 billion in stolen funds and unrealized tax revenue due to weak oversight of the crypto sector. The report highlights the risks associated with unregulated over-the-counter (OTC) platforms, money mule schemes, and the role of crypto in funding Russian military procurement. Ukrainian banks closed 80,000 mule accounts in 2024, yet criminal networks continue to exploit vulnerable individuals, offering as little as $120 for laundering activities [3].

The proposed bill is part of broader efforts to align Ukraine’s regulatory framework with international standards, including the EU’s Markets in Crypto-Assets (MiCA) regulations. The country is under pressure to harmonize its virtual asset rules with EU and Financial Action Task Force (FATF) standards by late 2025. Failure to do so could result in downgrades to Ukraine’s regulatory status and further complicate its fight against financial crime. The Law on Virtual Assets, adopted in February 2022, has yet to take effect due to the absence of a taxation bill, but the current draft may serve as the missing piece of the regulatory puzzle [4].

Analysts warn that without swift action, Ukraine risks becoming a persistent hub for illicit financial activity while deterring legitimate startups with excessive taxation and regulatory uncertainty. The new taxation framework aims to strike a balance by introducing clear rules and incentives for compliance. If passed, the bill could significantly shape Ukraine’s digital asset economy and reinforce its position in the global crypto landscape [6].

Source:

[1] Ukraine-Crypto-Legalization-Taxation-Bill-First-Reading (https://cointelegraph.com/news/ukraine-crypto-legalization-taxation-bill-first-reading)

[2] Parliament-Backs-Draft-Law-To-Legalize-Tax-Virtual-Assets-In-First-Reading (https://kyivindependent.com/parliament-backs-draft-law-to-legalize-tax-virtual-assets-in-first-reading/)

[3] Bitcoin-Regulation-Could-Yield-10-Billion-For-Ukraine (https://forklog.com/en/bitcoin-regulation-could-yield-10-billion-for-ukraine-experts-say/)

[4] Ukraine-Has-Lost-At-Least-10B-To-Crypto-Crime (https://finance.yahoo.com/news/ukraine-lost-least-10b-crypto-094223047.html)

[5] Ukraine-May-Be-Missing-Out-On-10B-Due-To-Weak-Crypto-Regulation (https://finance.yahoo.com/news/lax-crypto-oversight-may-cost-125840498.html)

[6] Cryptocurrency-Tax-Passes-First-Reading-In-The-Rada (https://finance.liga.net/en/cryptoeconomics/novosti/ukraine-to-tax-profits-from-cryptocurrencies-draft-law-passes-first-reading)