Ukraine Seeks to Tax Crypto as War and Security Pressures Mount

Ukraine’s parliament has taken the first formal step toward regulating and taxing cryptocurrencies, passing a draft bill in its initial reading on Sept. 3 with 246 votes in favor. The legislation proposes an 18% income tax on crypto gains, with an additional 5% directed toward military funding. To ease the transition for users, a 5% tax rate will apply to fiat conversions for the first year, according to the draft bill. The next phase will involve revising the bill ahead of a second reading, with key uncertainties remaining, including the designation of a regulatory body—whether the National Bank of Ukraine or the National Securities and Stock Market Commission will be responsible [1].

The initiative marks a significant shift for a country that ranks among the top ten globally in crypto adoption, as per Chainalysis’ 2025 Global Crypto Adoption Index, and leads Eastern Europe in decentralized finance (DeFi) value received. The move aligns with broader legislative efforts to integrate digital assets into the formal economy. In June, the Verkhovna Rada introduced a bill to establish a crypto asset reserve, and in August, a taxation bill was confirmed for its first reading. Analysts have highlighted that Ukraine’s high level of crypto usage, combined with the financial demands of ongoing conflict, has accelerated the push for formal regulation [1].

Security concerns have further fueled the urgency. A recent report by the Royal United Services Institute (RUSI) warned that Ukraine’s lax oversight has made it a potential hub for illicit financial flows, including the smuggling of restricted military equipment and foreign actors leveraging crypto for political influence. The study emphasized that without reforms, Ukraine risks damaging its international financial credibility at a time when it is most in need of global support. Experts also pointed to the potential for Russian intelligence to exploit Ukraine’s wartime distractions to channel illicit funds through local intermediaries [4].

The proposed tax regime mirrors recommendations from Ukraine’s financial regulator, which in April suggested a 23% tax rate on crypto gains. The current draft aligns with this by exempting crypto-to-crypto and stablecoin transactions, positioning Ukraine closer to countries with crypto-friendly policies. Yaroslav Zhelezniak, the lawmaker leading the initiative, acknowledged that the bill would undergo significant revisions before the second reading. “It is still unknown who the regulator will be,” he said in a translated statement, highlighting the ongoing debate over governance [1].

Globally, the trend of crypto regulation continues to gain traction. Countries such as Denmark, Brazil, and the United States have also taken steps to impose or refine tax policies for digital assets. In October 2024, Denmark’s Tax Law Council proposed a bill to tax unrealized crypto gains, while Brazil moved to end a crypto tax exemption in June 2025, imposing a 17.5% flat tax rate on gains. In the U.S., legislative discussions are ongoing, with hearings scheduled to explore a national framework for crypto taxation. These developments underscore the growing recognition of cryptocurrencies as a legitimate financial asset class requiring structured oversight [1].

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 Pushes Toward Full Crypto Regulation Amid ... (https://www.mexc.com/news/ukraine-pushes-toward-full-crypto-regulation-amid-wartime-pressures/84477) [3] Ukraine Pushes Toward Full Crypto Regulation Amid ... (https://coindoo.com/ukraine-pushes-toward-full-crypto-regulation-amid-wartime-pressures/) [4] Ukraine sets scene for crypto regulation through tax bill (https://cryptoslate.com/ukraine-takes-decisive-steps-to-legalize-crypto-sector-amid-tax-reforms/)