Ukranian draft law on cryptography passes the first parliamentary hearing

The efforts of Ukraine to regulate crypto have resulted in its draft law on cryptography having a successful first hearing in the Verkhovna Rada, the parliament of the country. A report unveiled this news on December 2 and noted that the country’s legislators discussed the idea and gave the green light. After the publication, the draft law on virtual assets now has two more hearings before it becomes a law. Should this happen, the country will be short-listed among those that have already introduced crypto regulations.

The report states that the adoption of the bill during the parliamentary hearing was not a smooth process. Some legislators complained that they spent time formulating laws on virtual assets, while there are more important issues affecting the Ukrainian economy. Nonetheless, the draft law received 229 votes in favor out of 340, thus passing through the first stage of the legislative process.

The draft law defines cryptocurrencies as a set of data in electronic form. According to the bill, crypto-currencies can be an independent subject of civil transactions. The bill also states that virtual assets may certify ownership or non-ownership rights. However, the bill suggests that all digital assets should not be used as legal tender in Ukraine. The draft then focuses on digital assets that are secured by goods or services and recommends that they should be taken off the market as soon as their security is no longer in place.

Crypto-regulation rules

The draft defines the owner of virtual currencies as the entity that holds them, unless they are held by a custodian, forfeited by a court decision or acquired illegally.

The Ukrainian Ministry of Digital Transformation would be responsible for regulating crypto-currencies when the draft law comes into force. Under the proposed provisions, providers of crypto services would have to register with the authorities before starting operations in the country. Companies must also provide information on the ownership structure and beneficiaries. In addition, they must ensure that they do not facilitate money laundering and that they carefully protect user data.

According to the Ministry of Digital Transformation, the introduction of a clear legal framework would encourage the growth of cryptographic business in Ukraine. The Ministry drafted the bill together with the country’s crypto-community, although some members are against the idea of crypto-regulation.

Despite attempts to positively change crypto-regulation, Ukraine is still at a disadvantage when it comes to global trading platforms. For example, Bittrex, a renowned crypto exchange, stopped offering its services to Ukrainians in September. Although the exchange did not give specific reasons for the discontinuation of its services, it claimed that the regulatory environment in the country at the time was not appropriate.