How Ukraine can adopt crypto regulation

The regulation and tax policies of cryptocurrencies and operations associated with them are actively being discussed in all countries. And it’s no wonder – a huge and dynamic market with no limits and capitalisation of $133 bln (according to the Coinmarketcap on December 21, 2018) is now in a “gray zone” where legislative uncertainty in the area of cryptocurrencies and blockchain regulation is a considerable threat to the world’s financial stability.

European practices

Willing to get an opportunity to collect additional taxes and influence the market, some countries defined cryptocurrencies as a payment method. Some of them defined cryptos as financial instruments and securities.

In the United Kingdom, for example, cryptocurrencies do not fall under specific regulations. However, if the crypto asset becomes a derived financial instrument in its classic sense- like an instrument of stock trading, ICO, crediting, insurance, factoring or investing, then the individuals that implement any corresponding activity have to abide by all the rules and regulations imposed in European directives MiFID II (regulation of financial markets).

According to the Ukrainian Blockchain Association, a similar approach has to be applied in Ukraine. To implement this, first of all, it is necessary to determine the status of a crypto asset: is it a product, security paper, payment instrument or anything else. Today, none of the existing objects of civilian law in Ukraine are suitable for determining the status of cryptocurrency. Therefore, in Ukraine, it is necessary to create new regulatory norms that would meet the requirements of the industry.

Approaches to cryptocurrency regulation in Ukraine

Work on the concept of regulating cryptocurrencies started at the beginning of 2018. The team at Blockchain Association of Ukraine and the industry specialists who collaborate with the Association defined a set of principles which correspond with world trends and have to be applied in Ukraine.

  • Exchange and turnover of cryptocurrencies should not be regulated or licensed until they are used as a financial instrument.
  • The use of VAT for crypto assets is not possible since the place of supply of this asset is not in Ukraine.
  • At the same time, only the tax on income delta will be beneficial.
  • Since the crypto mining basically means the same as the development of any software code, this activity cannot be classified as “other monetary intermediation”, so it should not be regulated or licensed.
  • Tokenization of business within the framework of existing legislation cannot be regulated or licensed.

The draft law which is the most closely related to these principles is the Law of Ukraine “On Amendments to the Tax Code of Ukraine regarding the taxation of transactions with virtual assets”, a bill No. 9083 dated 09/14/2018 regarding taxation (the initiators were a group of deputies, who supported Alexey Mushak).

This bill can be considered a compromise between the interests of the state and the business community. It involves the introduction of a new type of asset for tax purposes – a virtual asset that includes cryptocurrencies and token assets. The draft law proposes the temporary application of a 5% tax rate on profits from transactions with virtual assets for legal entities – until December 31, 2024 (after the specified date, the standard 18% rate of corporate income tax will apply). According to the authors of the draft law, the tax base will arise only if withdrawing cryptocurrency to fiat money, when transactions on the issuing and sale of virtual assets will not be subject to VAT.

It is worth recalling why other types of assets can not be applied to the status of cryptocurrency. In the case of an intangible asset, the fact that cryptocurrency might be considered as software code is rather controversial. However, in this case, there would be a VAT (until 2023 there will be a grace period with a rate of 0%). Moreover, the intangible asset can not have delta revenues: the tax is applied to 100% of the assets in the amount of 18% + 1,5%. Consequently, in 2023 the tax from the whole amount will be 38%. It is possible to argue that, because there is no definite place of product delivery, the VAT may not be applied. Regardless of whether the cryptocurrency is defined as a program code or not, in 2023 VAT will not appear. But even in this case, there will be no tax deductible expenses.

If the cryptocurrency will be defined as a financial instrument, VAT will not be applied, there would be a delta of income taxed at a rate of 18% + 1.5%. But then all market participants will be regulated and a tax agent can only be a licensed participant, which in the case of cryptocurrency, is currently impossible to implement.

Prospects for the adoption of legislative norms

According to the Association, a new bill which proposes the introduction of a virtual asset is the most viable, and its adoption (subject to refinement to the second reading) could be a major breakthrough in comparison with the scenario of a total lack of rules. The question is how much time will it take for the parliament to review and proceed the bill. On the basis of this, there are several scenarios that can be implemented in terms of the legal regulation in 2019.

  1. A bill may be adopted after several readings.
  2. No law will be adopted and the market will continue to exist, but outside of Ukraine.
  3.  A basic regulation will be created in the form of a General Tax Advice.

A general tax advice is a document that expresses the position of the executive authorities, in this case, the Ministry of Finance, which has regulatory legal force and which is based on the State Fiscal Service in determining the tax status of assets.

Adoption of the General Tax Advice for the regulation of transactions with cryptocurrencies has its advantages and disadvantages. One such advantage will be the absence of VAT for an asset whose place of delivery is not defined, and also affirm that the tax agent should be the user himself. Also, such a document will provide an opportunity to capture the declarative nature of the principles used in the regulation of cryptographic assets, when the basic legal framework will be created in parallel.

However, the negative consequences of the adoption of this document are critical. Taking into account that the interpretation can determine the cryptocurrency as an intangible asset, there will be no tax deductible expenses; the personal income tax will remain at 100% of the asset at a rate of 18% + 1.5%, since the delta tax will not be possible to be introduced without changing the legislative base. This option is unacceptable since the tax on the difference and the absence of VAT are not just desirable points, but those without which regulation does not make sense.

Thus, the adoption of the proposed bill number 9083 and the introduction of a new type of asset is a necessary measure to create a legal framework that will allow the market to grow in Ukraine and attract capital. Without new effective tools, clear rules of the game and transparent tax conditions, the market will continue to exist outside of Ukraine, rather than within, where it could stimulate the development of the economy and innovation in the country.

Blockchain Association of Ukraine launched blockchain school for developers

Blockchain Association of Ukraine that represents a comunity of Ukrainian crypto market players and experts has launched a 4-month practical course for developers on blockchain technologies. This is the start of the Association’s planned cycle of educational projects.

“The goal of the initiative is to prepare technical specialists for cryptoindustry. We know that open source development with open source code is a kind of “ikigai”, a matter of life and a dream for many professionals. This is one of the few niches where the rapidly growing industry provides ample opportunities for knowledge monetization, at the same time, giving the feeling of satisfaction from creating real valuae and products that are open to the world and each one is a brick in the foundation of the new paradigm of economic relations. In Ukraine, there are people willing to learn and there those who have unique knowledge, so we see a win-win situation for all interested parties, ”- Vice-President of BAU, Vitaly Bulychev.

Members of Association Kuna Exchange and Pandora Boxchain, as well as experts from Distributed Lab, Remme, Atticlab, BlockSoftLab and others worked together on the program.

The course program is divided into two blocks, the first “Satoshi way” is devoted to the “classic” Bitcoin blockchain and the basics of distributed registry technologies, and the second “PoSt-Satoshi era” — to a whole range of technologies and trends that have emerged after Bitcoin. Students will learn how to fully create blockchains, wallets and smart contracts, work with different methodologies and protocols, gain knowledge in the field of cryptography, game theory, etc.

blockchain hub academy

The course assumes a fully practical training format, the absence of teachers, maximum workloads and tasks of a high level of complexity, based on real cases of blockchain projects. At the end of the program, students will have the necessary expertise and skills to develop blockchain solutions on their own.

“It was decided to launch the first course on the basis of our partners, the university UNIT Factory. Since it is designed for developers who already have some knowledge of programming, selection was conducted among students who have reached a certain level of training. As a result, a group of 30 students was recruited and who started their first assignments this week. In the future, in future, we plan to develop the course that everyone can join,” –  Natalia Drik, CEO of the Association.

Blockchain Association of Ukraine have released an Overview of the blockchain industry of the country

The Ukrainian Blockchain Association (BAU) have released an Overview of the blockchain industry in Ukraine. This overview describes the stages of the formation of the industry and community, analyzes the companies operating on the market and looks at the areas in which they provide solutions. As part of the overview, the Association analyzed the level of business comfort with blockchain and the regulation of blockchain and cryptocurrency industries in Ukraine, as well as the expectations of market participants.

Blockchain companies map

As noted in the Overview of the blockchain industry in Ukraine, the formation of the community and system initiatives that focused on the development of the industry in Ukraine began in 2014 with the opening of Satoshi Square, the first in the CIS Bitcoin embassy and Bitcoin Foundation Ukraine. During this time, several people worked at the Bitcoin embassy, ​​while enthusiasts and experts exchanged ideas at meetings in the square. Today, the amount of information and educational content created in Ukraine about blockchain and cryptocurrencies is huge, events are held every week, while community and other interested people can meet at the new physical location Blockchain Hub Kyiv.

blockchain ukraine

According to the survey, the biggest group of companies were founded in 2017 – 32%, 20% in 2016, 14% in 2018, 12% in 2015, 8% in 2014 and 8% before 2014. Most companies’ founders come from development and programming backgrounds, or finance and investment, as well as cryptography and cryptocurrency, which indicates a strong expertise amongst the founders of the companies.

blockchain ukraine

“Now is the moment when the hype around Bitcoin for $20k has already passed, and blockchain companies appear like mushrooms after the rain and I want to say that this is good! We are all on the threshold of a new technology that is developing smoothly. The bear market has hardened all of us, and it showed who is in the industry for more than just quick money, which means that the hardest part begins – bringing this whole blockchain machine to a bright future,” – Sergey Vasilchuk, Attic Lab CEO.

Today in the blockchain industry in Ukraine there are about a hundred companies and projects, of which more than half were included in the review. It is worth noting that the company’s presence in the Ukrainian market does not mean its registration in our country, but marks its interconnection with other market participants and the placement of the majority of their team in our country.

According to Roman Kravchenko, CEO, Ukraine is, according to a number of indicators, optimal from the point of view of the benefits of the location of R&D centers for technology companies. This is facilitated by a fairly high level of engineering and mathematical higher education, great scientific personnel and mental models, in general, which are developed to solve non-standard problems and tasks. All this is further stimulated by the difficult economic situation, which encourages more and more people to choose IT as a profession. “In these favorable conditions in Ukraine, an extensive crypto community emerged that has every chance to become a bridge for connecting the markets of Western and Asian capital and innovation. The key task is to unite us, as a fragmented community into a single ecosystem and ideological platform with global goals and ambitions,” – Roman explained.

The most extensive areas in the blockchain industry of Ukraine, represented by the largest number of companies, are the development and creation of products and platforms, whilst the third largest area by number of companies is occupied by financial services. Fewer companies are involved in the public sector, investment, law, media and education sectors. Individual companies include trading, mining, analytics, security, gaming, marketplace, locations and marketing companies. The review includes the largest cryptocurrency exchanges.

As for cryptocurrencies and virtual assets, they still do not have a special status in Ukraine,as noted in the overview by members of the Association, the law firm Juscutum. According to the Joint Statement of Financial Regulators on the Status of Cryptocurrencies in Ukraine, the notion “cryptocurrency” and regulation of operations connected with it do not fall under any of the current regulatory regimes. At the same time, several regulatory attempts were made, and in particular, several bills were registered in Parliament aimed at ending the regulatory vacuum in the field of virtual assets, and the Ministry of Economic Development tried to initiate the approval of its own concept of state policy regarding virtual assets. Hence, although all attempts at regulation have not yet succeeded, the use of virtual assets is not prohibited or limited by the state, so Ukraine can be considered as a jurisdiction with a neutral approach to the virtual assets.

blockchain ukraine

Answering the question “What would you like from the state for comfortable development of your business?” the companies called the simplification of the system for starting a business and improvement of tax legislation, innovation and openness to experiments, expanded legal framework for regulating the cryptocurrency sphere, transparent and clear rules of doing business in crypto field. At the same time, according to the survey, 60% of companies rate the security level of doing business in Ukraine as acceptable.

At the same time, for the development of the ecosystem, system initiatives aimed at the development of the industry would like to see 66% of respondents, financial support and investment in companies – 54%, expanded educational opportunities – 50%, more networking – 34%.

“We see Ukraine going along with modern technologies and global changes. To implement this, we need to work to improve the conditions for doing business and to implement innovations and form an audience, thereby preparing the ground for digital transformation, by training developers and specialists who will create solutions and implement them. These are not fast complex processes, but they are necessary, and we are working on them with members of the Association,” – said Michael Chobanyan, Founder of Kuna Exchange and President of the Blockchain Association of Ukraine.


Blockchain Association of Ukraine (BAU), is a non-profit organization, that fosters adoption and development of the blockchain technology in Ukraine. Today, the Association includes Kuna Exchange,, Attic Lab, Pandora Boxchain, Axon Partners, Juscutum and Dreamteam. BAU is coordinates and implements ecosystem projects for the development of industry and education with a wide audience on the subject of understanding blockchain technology and the nature of cryptocurrency.

For more information and comments, please contact:

Darina Matkovska,,Telegram @darinamk, +380635893364

The first-ever Kyiv Blockchain Week starts in the capital of Ukraine in September 2019

Kyiv Blockchain Week 2019 is about to take place in the capital of Ukraine from September 16 to September 22, for the first time in its history. This is an initiative that is promoted and popularized by the Blockchain Association of Ukraine. Kyiv Blockchain Week does not have any particular beneficiary, events are self-organized, which marks the main ecosystem approach. Events at the Kyiv Blockchain Week have an educational purpose and serve blockchain community and the industry by bringing new opportunities for cooperation and development. 

“There are several goals for creating the Kyiv Blockchain Week initiative. First, we want to show the scale of the industry to a wide audience. Blockchain is not only about cryptocurrencies and trading, but it is also about social benefits, about the global financial system, it is about solving specific business problems. Secondly, we want to give more networking opportunities for interested people, ecosystem participants, and foreign guests – when the industry’s main events take place during the week, it’s more convenient to plan the schedule and, for example, come from abroad. Finally, it is about the brand of our country and the industry – strong developers, high-class specialists and high-quality initiatives,”- says Natalya Drik, the Executive Director of the Blockchain Association of Ukraine.

During the Kyiv Blockchain Week, there will be a series of educational and networking events related to various topics of blockchain technology and products based on its application.

  • September 16 — Houston, we’ve been hacked: How to protect your data on the Internet?

At the event you will learn about the ways to protect your data and how blockchain can help with that.

  • September 18 — Blockchain for Good

At the event, you will learn about case studies of blockchain in socially oriented services and products.

  • September 19— Global Payments Day conference

During the event, the problems and prospects of global payments, as well as the possibility of their decentralization, will be discussed.

  • September 19— #Buidl in the heart of Crypto Valley

CV Labs Venture Fund and Incubator will talk about the possibilities of the incubation program and obtaining financing for blockchain startups. 

  • September 20  – BlockchainUa conference

The biggest event of the blockchain industry in Ukraine covering a wide range of topics about blockchain technology cryptocurrencies and business in this area.

  • September 21 — 22 — BlockchainUa Hackathon 

The main blockchain hackathon of the industry – the strongest developers are invited to the competition for the development of blockchain solutions to real problems.

  • September 21— Horizen meetup

The presentation of the Horizen platform will discuss aspects of privacy and the use of blockchain solutions and cryptocurrencies, as well as the use of sidechains.

On the Kyiv Blockchain Week website, you will also find the information about private parties within the framework of the BlockchainUa conference, as well as details about participation in events, the list of which is not final and can be added. Application for adding an event to the schedule of Kyiv Blockchain Week is possible via the link.

Earlier, the Blockchain Association of Ukraine released an Overview of the blockchain industry of Ukraine, which describes the stages of formation of the industry and community, analyses companies operating in the market, and areas in which they provide solutions.


About Association:

Blockchain Association of Ukraine (BAU) unites specialists in the blockchain sphere. BAU is a non-profit organization that actively promotes integration of blockchain technology in various fields of activities in Ukraine, and spreads the knowledge about technology. The main mission of the Association is to develop a multilateral dialogue between community, business and the state, the result of which will be consensus in all areas of activity.

For more information, contact:, +380635893364