Ukraine to legalize crypto in early 2025 with no tax exemptions planned

Ukraine is moving closer to legalizing cryptocurrency with a new draft law expected to be completed in the first quarter of 2025.

Danylo Hetmantsev, chairman of the Ukrainian Parliament’s Finance, Tax and Customs Policy Committee, confirmed that the draft law is almost ready for its first reading, Pravda reported.

Hetmantsev stated that the law was developed in cooperation with the National Bank of Ukraine and the International Monetary Fund.

The proposed law would regulate cryptocurrency transactions and implement a taxation model similar to that of securities. Profits from crypto assets will be taxed when converted into traditional currency. Hetmantsev emphasized that Ukraine is taking a cautious approach to tax exemptions for cryptocurrencies and raised concerns about potential tax evasion in traditional markets.

While the government refrained from including tax exemptions in the draft to prevent abuse, consultations involving European experts and the IMF helped shape the cautious stance.

Taxation on crypto transactions will mirror the tax treatment of securities and ensure that profits are taxed only when assets are converted into fiat currencies.

Ukraine’s dance with crypto

This move to legalize cryptocurrency in Ukraine comes in the wake of growing interest in digital assets. The country has previously adopted blockchain technology for some government functions.

During Russia’s large-scale invasion of Ukraine, Ukraine received millions in crypto donations. The donations were used for a variety of humanitarian and military purposes, showcasing the advantages of unlimited and decentralized funds during the crisis.

In late 2023, Ukraine implemented FATF crypto standards to meet international compliance and avoid the gray list.

While the legal framework for cryptocurrency in Ukraine is almost complete, the first reading of the bill is expected to take place after the new year.