Why did Ukraine legalize cryptocurrency amid war fears? - Kalkine Media

February 19, 2022 04:02 AM AEDT | By Versha Jain
Follow us on Google News:

Highlights

  • The Ukrainian government passed a bill to legalize cryptocurrencies on Thursday.
  • But digital currencies are not legal tender yet.
  • Volunteer groups have been receiving donations in cryptocurrencies in Ukraine lately.

The Ukrainian government has passed a bill into law legalizing cryptocurrency but not as a legal tender. While the decision received broad support from the crypto community, its timing has drawn attention. It is believed the government wants to keep all economic channels open amid the border tensions with Russia.

According to Western officials, Ukraine is on the verge of a war with Russia, with both sides amassing troops on their borders. Top US officials warned of an imminent conflict.

Bitcoin, the world’s largest cryptocurrency by market capitalization, plummeted below US$41,000, dragging down the overall market by over 5.3% on Friday morning. 

On Thursday, Ukrainian digital transformation minister Mykhaylo Fedorov had announced the passing of the cryptocurrency bill. The crypto exchanges and companies can now operate legally in the country. And users will have secure access to virtual assets. 

Meanwhile, the government is altering the tax and civil codes for the digital assets market.

Also Read: High-potential metaverse stocks to watch now – MSFT, NVDA to FB

The Ukrainian parliament tried to pass a similar bill in September 2021 but was vetoed by President Volodymyr Zelensky, citing the country can’t afford a new regulatory body to manage crypto.

Why Did Ukraine Legalize Cryptocurrency Amid War Fears?

This time, however, the president gave his consent. Ukraine’s National Securities Commission is made the regulatory authority for the cryptocurrency market.

Its primary function will be issuing permits to crypto service providers, monitoring, and supervising. 

Also Read: Explore these top gaming stocks – from RBLX to AMC

Ukraine has not made cryptocurrency legal tender

Although cryptocurrencies are legal in Ukraine, they are not legal tender. It means people can trade and invest in cryptocurrency but cannot use them as a legal fiat currency.

The law also details guidelines to be followed by the crypto companies, with provisions for fines and other penalties in case of rule violation. 

Also Read: Why Trade Desk (TTD), ViacomCBS (VIAC) stocks plummeted today?

(On the brink of War, Ukraine legalizes cryptocurrencies, Bitcoin plunges below US$41,000)

© Kalkine Media 2022 ®

Also Read: Top 5 defense stocks: LMT, BA NOC rise amid geopolitical tension

Ukraine’s crypto market 

According to Chaianlysis, Ukraine ranked fourth in the 2021 Global Crypto Adoption Index, a measure of volume and value of crypto traded in a country.

After Russia banned crypto mining, Ukraine has opened its door to the cryptocurrency industry.

It hopes to attract more foreign investment into its crypto market after legalization. 

Ukraine’s volunteer groups have been receiving donations in cryptocurrencies lately. According to Reuters, some of them are involved in supplying equipment to government forces. 

Also Read: Top 9 energy ETFs: Can XLE, FENY protect against market volatility?

A report of blockchain researcher Elliptic said the volunteer groups had received over US$550,000 worth of cryptocurrency last year. In 2020, it was around US$6,000. According to Elliptic, in 2021, Kyiv-based group Come Back Alive received crypto worth around US$200,000. The group provides material and medical supplies to the Ukrainian army.

Cryptocurrencies can be sent and received anonymously. It does not require the traditional fund-transfer system to send or receive crypto donations.

Also Read: Walmart (WMT) stock up after beating Q4 expectations, raises guidance

Bottomline

With the legalization of cryptocurrencies, Ukraine may see more donations pouring into the country, at least as long as the border tensions remain.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.



Top ASX Listed Companies

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK