On September 9, 2021, Ukraine's parliament, the Verkhovna Rada, officially passed the long-awaited law “On Virtual Assets” in its second and final reading, providing a comprehensive legal framework for the country's rapidly growing crypto market. The bill received overwhelming support with 276 votes in favor out of 376 lawmakers present, and only six against, marking a milestone in Ukraine's approach to digital asset regulation.
Key Provisions: Virtual Assets as Intangible Goods
The new law defines virtual assets (including cryptocurrencies like Bitcoin and Ethereum) as intangible goods, categorized as either “secured” or “unsecured.” However, it explicitly states that cryptocurrencies are not legal tender and cannot be used as a means of payment for goods or services within the country. This distinguishes Ukraine from nations like El Salvador that have adopted Bitcoin as legal currency.
Importantly, the legislation introduces the term “financial virtual assets,” which must be issued by entities registered in Ukraine. If the underlying asset is a fiat currency, the asset falls under the purview of the National Bank of Ukraine (NBU). If the underlying asset is a security or derivative, the National Securities and Stock Market Commission (NSSMC) becomes the primary regulator. This bifurcated regulatory approach aims to balance innovation with financial stability.
Rights and Obligations for Market Participants
Under the new framework, crypto market participants are allowed to independently determine the value of virtual assets, open bank accounts for transaction settlements, and seek judicial protection for their rights. Service providers—including exchanges, custodians, and wallet operators—are required to comply with Ukraine's anti-money laundering (AML) and counter-terrorism financing (CTF) regulations, just like traditional financial institutions. This means implementing customer due diligence, transaction monitoring, and suspicious activity reporting.
The law will officially come into effect only after the parliament passes amendments to the country's tax code, which are yet to be voted on. Once the tax code is updated, crypto businesses will have clear guidelines on how to report and pay taxes on digital asset transactions.
Government Stance: Positive toward Digital Economy
Ukrainian authorities have consistently expressed a favorable attitude toward the crypto industry. During a visit to the United States, President Volodymyr Zelensky highlighted the importance of launching a legal digital asset market, calling it a “development vector” for the nation's digital economy. Deputy Prime Minister and Minister of Digital Transformation Mykhailo Fedorov added that the country is working to become an attractive jurisdiction for crypto companies.
The legislative journey of the virtual assets bill began in December 2020 when it passed its first reading. After several rounds of revisions, a revised version was presented in June 2021. Following criticism from regulators including the NBU and NSSMC, the authors further amended the document to address concerns. With the final passage, Ukraine joins a growing list of countries that have implemented specific crypto regulations. According to Chainalysis' 2021 Global Crypto Adoption Index, Ukraine ranked among the top five globally in grassroots crypto adoption, and the new law is expected to further boost the local ecosystem.
Looking Ahead: Tax Code and Market Impact
The immediate next step is the adoption of tax amendments. While the virtual assets law provides legal clarity, the absence of a tax framework has left businesses in a gray area. Industry observers anticipate that the government will propose a moderate tax regime to encourage compliance and attract investment. Once fully implemented, the law could pave the way for the National Bank of Ukraine to experiment with a central bank digital currency (CBDC) and for blockchain startups to operate with confidence.
In summary, Ukraine's “On Virtual Assets” law represents a balanced approach: it legitimizes cryptocurrencies as valuable digital goods while firmly rejecting their use as money, aligning with global trends of regulating crypto without full legal tender status. The market now awaits the final piece of the puzzle—tax legislation—to unlock the full potential of this regulatory milestone.