Due to the lack of regulation in the cryptocurrency market, Ukraine, from 2016 to 2022, lost more than $52.8 billion. This is stated in a study by the analytical group Ukraine Economic Outlook.
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Experts calculated the potential gains for the population from investments in cryptocurrency, the income of mining farms and the issuance of stablecoins within the country.
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According to their assessment, $48.8 billion of losses fell on direct incomes of households and businesses (GDP), $4 billion — lost tax revenues.
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“The bulk of the ‘lost’ incomes came from the bullish years of 2017 ($23.3 billion) and 2020 ($14.9 billion),” the report says.
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Among the key missed opportunities highlighted by the analytics were:
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- cheap electricity during the early phases of cryptocurrency mining;
- the lack of investment instruments for the population that are not tied to centralized structures;
- limited liquidity of currency instruments within the country.
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They noted that the calculations are conservative because they assess domestic demand without accounting for potential inflows of foreign investment.
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Deputy Minister of Digital Transformation Oleksandr Bornyakov responded to the publication, emphasising the importance of regulating the crypto market.
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“Large capital remains where transparent regulatory rules are in place, state mechanisms to protect property rights, and stimulating tax rates work effectively,” he wrote.
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Bornyakov criticised the current version of Ukraine’s crypto-tax bill, which, the day before, was submitted for consideration in the Verkhovna Rada. According to him, it does not foster a simple regulatory environment and incentivising taxation — it proposes a fixed rate at 18%.
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“To bring the crypto sector out of the shadows, a special tax regime must be created. Rates should be 5% for individuals and 18% for companies, with the additional option of using the tax regime advantages of Diia City,” he proposed.
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Earlier, the public association “Virtual Assets of Ukraine,” together with the cross-faction group of deputies Blockchain4Ukraine, advocated the exemption of individuals and legal entities from taxation on income from virtual assets held on their balance for more than a year.
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In addition, the organisations proposed a phased increase in tax rates on income from virtual assets for individuals and corporate profits, starting at 5% in the first year and 10% in the second year.
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Back in September 2021, the law “On Virtual Assets” was adopted; it will not come into force until amendments are made to Ukraine’s Tax Code.
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Due to the lack of a regulatory framework, cryptocurrency exchanges do not yet pay taxes in the country. In early June, the National Securities and Stock Market Commission of Ukraine NSSMC presented a sector-specific bill.
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Earlier, the BES calculated that over ten years Ukraine’s budget lost at least 3 billion hryvnias (about $81 million) in taxes from the activities of local cryptocurrency exchanges.