Ukraine’s Financial Watchdog Clarifies Stance on Cryptos

The State Financial Monitoring Service of Ukraine has published its official position on crypto matters. While offering some borrowed definitions of terms like virtual currency and mining, the agency notes that changes to the legal status of cryptocurrencies in the country are expected.

Also read: Uzbekistan to Legalize Bitcoin and Support Developers

Due Diligence

In a statement published on its website, SFMS said it was constantly collecting, processing and analyzing financial data, including crypto-related information. According to the official announcement, the agency is following transactions that are subject to regular monitoring, but not only. Dubious money flows outside the mandatory scope are also monitored.

Ukraine’s financial watchdog has drawn attention to one of its main priorities – the implementation of customer due diligence measures. The agency believes regulatory efforts in that area should be focused on cryptocurrency exchanges, wallet providers and intermediaries between the traditional financial system and the crypto ecosphere. It said these parties should abide by the current Ukrainian anti-money laundering and anti-terrorism financing legislation.

The monitoring service has also clarified its stance on several other aspects of regulation. Noting that it expects changes to the legal status of cryptocurrencies in Ukraine, SFMS admits it is currently following guidelines from the Financial Action Task Force (FATF). The Paris-based intergovernmental organization has issued recommendations to combat money laundering and terrorism financing. It has also provided definitions of several crypto-related terms, that Ukrainian regulators plan to use until their country adopts new legislation.

In the statement, SFMS differentiates between electronic money – the digital form of fiat currency, and cryptos, referred to as “virtual currencies”. It explains that cryptocurrencies can be traded digitally and used as unit of account. They can also serve as means of exchange and storage of value. However, the agency points out that cryptocurrency is neither issued, nor guaranteed by any jurisdiction. It performs its functions on the basis of an agreement reached within peer-to-peer networks of users, Ukrainian officials say, educating the public.

Due Regulation

Ukraine has yet to adopt its own cryptocurrency regulations. Three drafts have been introduced in the Verkhovna Rada since last year. The first bill, submitted in October, defines cryptocurrency as property that can be exchanged for goods and services. The second draft law states that cryptos are financial assets. The third bill proposes tax exemptions for profits from crypto trading and mining incomes.

According to Ukrainian media, experts from the European Bank for Reconstruction and Development have been involved in the preparation of another draft that should be presented in the next few weeks. Its authors hope to legally define crypto terms, introduce blockchain solutions, and regulate ICOs, Anycoin news reports.

Calls are mounting to regulate and legalize cryptocurrencies in Ukraine. In January the cybercrime combating department of the National Police said they should be either legalized, or banned. Ukraine’s Justice Minister Pavel Petrenko stated that government institutions should respond to the phenomenon and bring bitcoin into the legal field. Cryptocurrencies have been discussed during a meeting of the National Cybersecurity Coordination Center in Kiev. Experts have warned, however, that the legalization process may take several months.

Do you think Ukraine will adopt cryptocurrency regulations soon? Share your thoughts in the comments section below.

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