Ukraine to Legally Recognize Cryptocurrencies but Ban Their Use in Daily Transactions by 2025

Ukraine has outlined a comprehensive regulatory framework for cryptocurrencies, aiming to legally recognize digital assets while explicitly banning their use in everyday transactions. The country's National Bank, led by Governor Andriy Pyshnyy, has signaled plans to formalize these regulations by October 2025, ensuring that digital currencies such as Bitcoin and Ethereum do not function as legal tender or payment methods. This move is part of a broader effort to align Ukraine’s financial system with European regulatory standards, particularly the EU's Markets in Crypto-Assets (MiCA) directive, while safeguarding the national currency and monetary sovereignty [1].

The proposed legal structure, outlined in draft law No. 3637, grants virtual assets a defined legal status, offering clarity for investors, developers, and service providers. However, the law explicitly prohibits the use of cryptocurrencies for retail payments, emphasizing that they will not be accepted as a medium of exchange for goods and services. This distinction reflects a cautious but innovation-friendly approach, allowing for the integration of blockchain technology without compromising the stability of traditional financial systems [1].

Governor Pyshnyy has underscored that the exclusion of crypto from payment mechanisms is a deliberate policy choice, designed to prevent potential disruptions to monetary policy and currency control. “Virtual assets cannot be a means of payment, cannot in any way undermine the effectiveness of our monetary instruments,” he stated, adding that this represents a “red line” the bank will not cross. The policy ensures that cryptocurrencies are recognized as investment vehicles but not as substitutes for the national currency [1].

The decision also has implications for how Ukraine will manage its digital asset reserves. While the country has historically accepted cryptocurrency donations, particularly during periods of crisis, these will continue to be treated as reserve holdings rather than circulating assets. This approach allows Ukraine to benefit from the innovation and flexibility of blockchain without introducing volatility into its day-to-day economy [1].

This regulatory stance contrasts with that of countries like El Salvador, where Bitcoin has been adopted as legal tender. Instead, Ukraine is pursuing a path that prioritizes regulatory control and alignment with international norms. The country’s approach may serve as a model for other nations seeking to integrate digital assets into their financial systems while maintaining macroeconomic stability [1].

Analysts suggest that the proposed framework could enhance Ukraine’s competitiveness in the digital economy, potentially attracting foreign investment and fostering a more structured environment for blockchain innovation. By creating a clear legal environment for digital assets, the government aims to encourage development without exposing the broader economy to the risks associated with speculative crypto markets [1].

The legislation remains in its draft phase, but its core principles have already sparked discussions among legal and financial experts. The emphasis on clarity, control, and international alignment indicates that Ukraine is positioning itself as a responsible and forward-looking participant in the global digital economy [1].

Source: [1] RWA tokenization: a step forward to invest in Ukraine https://papers.ssrn.com/sol3/Delivery.cfm/5362221.pdf?abstractid=5362221&mirid=1&type=2