The bill for legalising the cryptocurrency market in Ukraine needs substantial revisions before its second reading to avoid unnecessary burdens on businesses and prevent regulatory abuses, according to Petro Bilyk, a partner at Juscutum’s Technology and Investment practice, speaking to ForkLog.
He believes the bill should not contradict the state guarantees of the Diia.City legal regime’s stability, whose conditions remain unchanged for 25 years from adoption.
“The proposal to switch Diia.City participants to the general tax system for virtual asset (VA) operations contradicts the principle of legal certainty and poses risks to the investment climate,” Bilyk explained.
Another crucial point is the establishment of a transition period of at least a year and the easing of sanctions. This would allow market participants to adapt to new requirements while awaiting regulatory details. Otherwise, the risk of widespread violations due to the objective impossibility of rapid compliance implementation will increase, the lawyer warned.
The expert suggests it would be prudent to divide the role of the virtual asset market regulator between the National Bank of Ukraine and other competent authorities, depending on the type of asset.
The bill requires harmonisation with the European MiCA regulation in terms of expanding the list of entities eligible for a VA issuance license.
“The EU allows token issuance by all credit institutions. Ukraine’s proposed restriction to banks only contradicts the principle of equality and hinders market development,” Bilyk noted.
He described the maintenance of a separate user registry as excessive, since “data is already stored on the blockchain,” and duplication would lead to additional costs for providers. The wording regarding information provision to the regulator also requires clarification to prevent abuses and ensure legal certainty.
The expert believes integrating the bill’s provisions into the international context is the right approach.
“Restricting VA activities for companies registered in offshore jurisdictions could lead to a ban on USDT and other tokens, resulting in investment loss and project outflow, making the market less transparent,” he stated.
The list of potential amendments is not exhaustive and may be expanded. Bilyk emphasised that the bill’s approval in the first reading only signifies endorsement of its concept. Within 14 days, the relevant committee can introduce changes.
“However, even submission for a second reading does not guarantee the document’s adoption,” he added.
Back in May, the Office of the President of Ukraine blocked consideration of this bill. Reportedly, the decision was influenced by the NSSMC, which was to become one of the market regulators.