The Ukrainian government has legalised cryptocurrency payments in its latest bid to control economic grey areas.
Officials have adopted new legislation which will use international anti-money laundering (AML) best practices in cryptocurrency transactions, essentially legitimising digital assets.
The new legislation, pushed through by Ukraine’s legislative arm the Verkhovna Rada, mirrors the intergovernmental Financial Action Task Force’s (FATF) stance on digital assets.
Under the new laws, digital assets can be legally used as a medium of exchange. This paves the way for a whole host of supporting services commonly accessible in other jurisdictions, such as exchanges, payment processors, and cryptocurrency funds.
Evidence of Ukraine’s new welcoming stance towards cryptocurrency can be seen in the wording of the new bill, which claims it accommodates “providers of services related to the transfer, exchange, and storage of virtual assets”.
According to Techannouncer, the new bill was supported by a significant majority of the Ukrainian Rada.
Interestingly, the new Ukrainian bill makes it possible for private individuals as well as organisations to offer digital asset services, but each provider must comply with strict AML practices.
Greater control over crypto investors?
There has been speculation that Ukraine’s legalisation of crypto payments and formalisation of blockchain regulation is part of a wider push to exert control over economic ‘grey areas’, where corruption and tax evasion is rife.
One such area where the Ukrainian government has pushed through reforms is in the gambling sector, which was only recently legalised in the Eastern European nation.
In November, it was revealed that Ukrainian lawmakers would be given powers to force its citizens to disclose their cryptocurrency holdings.
The new laws were ushered in using an amendment to the existing Corruption Prevention Law, which was adopted in 2014.
Ukrainian officials claimed the legislation was part of an effort to crack down on corruption and terrorist financing.
Ukraine is a priority partner within the European Neighbourhood Policy and has expressed a desire to join the EU in the past. As a result, Ukraine has taken several steps to align its monetary policy with recommendations from the EU.
The focus on complying with European monetary legislation and AML requirements comes amid growing tensions between Ukraine and its Eastern neighbour Russia.
Since Russia annexed and took de facto rule of the Crimea in 2014, Ukrainian officials have sought to align themselves more closely with their European allies, who declared the annexation as illegitimate.
Ukraine’s latest focus on legalising cryptocurrencies may be part of its strategy to bring its monetary policy in line with the rest of Europe.