Ukraine’s Digital Ministry Affirms Bitcoin’s Safety for Economy

Legislative proposals from the National Securities and Stock Market Commission of Ukraine and the Ministry of Digital Transformation do not recognize cryptocurrencies as a means of payment and pose no threat to the traditional economy. This was stated by Deputy Minister of Digital Transformation for IT Development, Alexander Bornyakov.

Despite differences in the bills, both regulators assign the function of a means of payment only to a specific type of virtual asset—electronic money tokens. These are defined as a type of virtual asset tied exclusively to the value of the hryvnia.

Electronic money tokens are the legal means of payment for goods and services throughout Ukraine. Only banks and non-bank financial institutions that are residents of Ukraine can issue them.

The regulation of the issuance and circulation of electronic money tokens in both documents is entrusted to the National Bank and must be developed separately.

“The legal regime for hryvnia-denominated electronic money tokens will correspond to that applied to ordinary electronic money, which has already been used in the state without affecting macroeconomic stability. I am confident that colleagues from the NBU will not allow the implementation of any overly risky models,” Bornyakov noted.

According to him, tokens fully backed by cash or non-cash hryvnias will not affect the overall money supply.

“All other digital assets will be used only in the virtual environment, without risks to the real economy,” Bornyakov added.

The enactment of the law “On Virtual Assets,” approved in 2021, has been postponed until the taxation of digital asset transactions is adopted. Additionally, the text of the regulatory act was updated to reflect the norms of the European MiCA regulation. 

In turn, the Ministry of Digital Transformation presented a draft of an alternative law.

Earlier, MP Alexei Zhmerenetsky stated that a working group plans to prepare a compromise legislative regulation to reconcile the proposals of the National Securities and Stock Market Commission and the Ministry of Digital Transformation.

Moreover, the IMF recommended that the NBU and the National Commission develop an updated version of cryptocurrency market regulation legislation in Ukraine by the end of June 2024.