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Current Affairs

Ukraine’s new law on cryptocurrencies

Date: 21 March 2022 Tags: Miscellaneous

Issue

Ukraine will establish a legal framework for operating cryptocurrencies in the country in a regulated ecosystem. 

 

Background

The law was passed by Parliament of Ukraine in February and it was made into a law after a sign by President Zelinskyy.

 

Details

  • The law will determine the legal status, classification, ownership and regulators of virtual assets. It will establish registration requirements for cryptocurrency service providers. 

  • Foreign and Ukrainian cryptocurrencies exchanges will have to operate legally and banks will open accounts for crypto companies.

 

Regulation of cryptocurrency

  • The National Securities and Stock Market Commission will regulate the cryptocurrency market in Ukraine.

  • The body will have powers to determine policies on digital assets, issue licenses to businesses dealing with cryptocurrencies, and act as a financial watchdog.

 

Why cryptocurrency is legalized?

  • Cryptocurrency is widely used in Ukraine and there were discussions earlier to legalize them. The recent war with Russia has triggered the move.

  • Since the start of the crisis, Ukraine has received more than $100 million donations in form of cryptocurrency.

 

Impact of law

After the new law, country can convert crypto directly into fiat without having to use it to procure goods from crypto-friendly suppliers.

 

Legalization across globe

  • El Salvador became the first country to legalize bitcoin. However, implementation has been mired in controversy due to identity theft and technical glitches.

  • Many countries are launching Central Bank Digital Currencies (CBDC) that are digital currencies backed by the state.

 

Regulation in India

  • India effectively legalized cryptocurrency when it imposed 30 per cent tax on virtual assets, including cryptocurrencies.

  • The government is working on a law to regulate private cryptocurrencies and RBI is planning to launch the pilot of its CBDC called the Digital Rupee.