As digital donations pour in, Ukraine’s president just approved making a law to make cryptocurrency legal.
A measure to legalize cryptocurrency was enacted by Ukraine’s parliament a month ago, laying the groundwork for the regulation and management of cryptocurrencies such as Bitcoin and Ethereum. Volodymyr Zelensky, the country’s president, signed the measure “On Virtual Assets” into law today, establishing a legal framework for the country to operate a regulated crypto market.
“A law on virtual assets has been passed by Parliament. In a matter of days, I believe the president will sign it into law. As a result, we make every effort to be as friendly to virtual assets as possible. In an interview with TechCrunch earlier this week, Ukraine’s vice prime minister and minister of Digital Transformation, Mykhailo Fedorov, said, “We are maintaining this endeavor during wartime as well.”
Crypto exchanges and organizations managing digital assets will now be required to register with the government in order to operate lawfully in Ukraine, according to reports from Cointelegraph, Coindesk, and other digital asset-focused outlets, and banks will be able to open accounts for crypto firms.
According to reports, the law also gives Ukraine’s National Securities and Stock Market Commission the authority to create the country’s digital asset regulations, issue licenses to crypto enterprises, and function as a financial watchdog. (In fact, Ukraine’s parliament passed a law legalizing cryptocurrencies in September, but President Zelensky vetoed it soon after, claiming that the country couldn’t afford to set up a new regulatory body to oversee bitcoin.)
The law “on virtual assets” was signed today! Now crypto is legalized in Ukraine. Thank you, President @Zelenskyy for the support. We believe that crypto industry offers new economic opportunities. We will do our best to bring the bright new future closer as soon as possible.
— Alex Bornyakov (@abornyakov) March 16, 2022
If you thought cryptocurrency was already legal in Ukraine, you’re not alone. According to Chainalysis, even without any regulation, Ukrainians, Russians, and Venezuelans (in that order) had been among the most active retail users of digital currencies by the fall of 2020.
At the time, Chainalysis’s head of research told Coindesk that a “very tech-native population” and a “industrious startup ecosystem” were propelling Ukraine’s march to the top. (Coindesk also stated that Eastern Europe has a higher rate of cybercrime than other locations, which may have contributed to the high trading volume.)
Ukraine has received at least $100 million in cryptocurrency donations in the weeks since Russia invaded the country and began slaughtering military and civilians alike, leading an estimated three million people to escape the country of 42 million people. (NPR just compared the number of Ukrainian refugees who have fled to Poland — almost 1.8 million — to Warsaw’s population.)
With the new regulation in place, Ukraine’s first crypto exchange, Kuna, will no longer be confined to assisting the country in spending donations directly with crypto-friendly vendors, but will also be able to convert bitcoin to desperately needed currency. Meanwhile, the country has teamed up with FTX, a Bahamas-based exchange, to convert crypto donations to Ukraine’s war effort into fiat for deposit at the National Bank of Ukraine.
According to Coindesk, FTX and Kuna, as well as Everstake, a staking platform, has partnered with Ukrainian government officials to launch Aid for Ukraine, a donation website for users that accepts donations in Bitcoin, Ether, Tether, Polkadot, Solana, Dogecoin, Monero, Icon, and Neo “to support people in their fight for freedom.”
And when it comes to gathering finances from all over the world, crypto donations have been crucial. “We were able to secure $55 million.” Fedorov told TechCrunch on Tuesday that “all of that has been directed toward the demands of the Ukrainian army.”
We don’t know if the project is the “first instance of a cryptocurrency exchange offering a channel for crypto donations to a public financial institution,” as Everstake claims, but it’s probably safe to say it’s one of the first.
Certainly, none of this is happening the way that Ukraine officials expected just a few short months ago when the country was profiled in the New York Times under the headline, “The Crypto Capital of the World.”
“The big idea is to become one of the top jurisdictions in the world for crypto companies,” Alex Bornyakov, deputy minister at Ukraine’s years-old Ministry of Digital Transformation, told the outlet for that story in November before the unimaginable happened.
“We believe this is the new economy, this is the future, and we believe this is something that is going to boost our economy.”