Ukraine’s Ministry of Digital Transformation flags key hurdles to Web3 development

Lack of regulatory framework for the crypto industry and banking restrictions are named as the main reasons hindering the development of Web3-technologies in Ukraine. This is evidenced by the отчет of the Ministry of Digital Transformation.

Fifty Ukrainian Web3 entrepreneurs took part in the study.

Since the updated version of the law “On Virtual Assets” has not yet been adopted, specialized startups have to register their business outside Ukraine.

Additionally, their activities are affected by lack of access to banking services and currency and hryvnia restrictions imposed in connection with martial law. As a result, companies find it difficult to meet financial obligations to counterparties.

Moreover, Ukraine needs to integrate European norms MiCA into its local cryptocurrency legislation. However, rushing in stricter requirements risks driving Web3 startups to migrate to other countries.

To overcome these problems, the Ministry of Digital Transformation is pushing alternative draft laws on “On Virtual Assets” and on the taxation of cryptocurrency transactions. In the ministry’s view, this would neutralize the listed negative factors.

“In wartime conditions, it is strategically important to develop new sectors of the digital economy. The Web3 industry can become a powerful driver of technological and economic development for the country and strengthen leadership in the field of digitalisation,” said Oleksandr Bornyakov, Deputy Minister of Digital Transformation for IT Development.

The Ministry’s team will take the results of its study into account in shaping state policy in the digital economy.

Earlier in November, Ukraine announced the creation of a Web3 projects sandbox.

ForkLog previously analysed the features of the draft laws proposed by the Ministry of Digital Transformation.