Ukraine has long considered legalizing and regulating cryptocurrencies. And the time has come: Timur Khromaev, Chairman of the National Securities and Stock Market Commission (NSSMC), has announced that the Financial Stability Council supports crypto regulations. The latter will recognize certain cryptocurrencies and tokens as financial instruments.
Besides, the document will define the National Bank of Ukraine, NSSMC, Ministry of Finance, State Financial Monitoring Service’s regulatory role as well as spell out licensing terms, information disclosure etc.
Khromaev noted, “This is the first important step which will foster consensus between government agencies and financial regulators. It shows that the Verkhovna Rada of Ukraine (the Ukrainian Parliament) is ready to cooperate with the cryptomarket and define regulatory terms which will secure transparency and enhance the quality of partnership between investors and the crypto sphere.”
Therefore, Khromaev, who has previously pronounced that cryptocurrency “will become an indispensable part of economic and financial relations,” reiterated his stance.
The Ukrainian CyberPolice has also noted that it supports the legalization of cryptocurrencies. Specifically, Serhii Demediuk, Head of the Cyber Police Department, emphasized that “factually cryptocurrency qualify as digital money” and added that blockchain should be used by governmental and private structures.
Mykhailo Chobanyan, co-founder of the first public Ukrainian crypto stock market Kuna.io, has been waiting for Khromaev’s decision. And even made a peculiar assumption that Ukrainians own crypto worth billions of dollars.
“This law is necessary not only for the crypto business but for the exchanges as well. At the same time, it will not apply to those who use it for private purposes. After all, Ukraine does not prohibit cryptocurrencies as such. The Constitution stipulates that we are free citizens and therefore enjoy our freedoms,” noted Chobanyan.
While the regulation text has not been publicized by its authors yet, the law is expected to be passed this fall and come into force in 2019. One of the drafts was registered in 2017. It was later combined with another crypto law suggestion.
Did everybody have their say?
While Khromaev’s announcement is predominantly positive, as a lot of arbitrary ventures have been going on in Ukraine, which prompted POLITICO to call it the Wild East of Cryptocurrencies, not everyone is excited about the decision. To be fair, nothing ever excites or satisfies the suspicious Ukrainian nature, which also happens to be emotionally unstable, outspoken, and prepared to prove a point with fists, especially in the parliament. But the critique which has emerged is partially understandable and justified.
For example, Dim Lebezun, one of the 22 commentators under Khromaev’s post the majority of which are less than flattering, wrote “The logic posits: now that the crypto operations have been “regulated,” air consumption should be next.” He also attached a video from a cartoon based on Gianni Rodari’s satire Tale of Cipollino. In it, the rulers state that air tax has resulted in less breathing. Thus, the citizens have to pay 100 Lire for the “rain” and 200 — for the “heavy rain.”
Oleh Shulha was more explicit, “You’ve recognized them, so what? Probably hoping to rip off taxes, sell licenses, and tell where and how to exchange them? #### you!” Once calmer he proceeded to say, “Crypto can’t be regulated. Any attempts will lead to a creation of new decentralized platforms,” but then lost it again, “and all of those so-called “market players,” who are vigorously kissing the regulator’s ass for their own interests, will be left out. They will lose access to the real, regulation-free market, and end up on the outskirts.”
Mr. Shulha also engaged in a heated comment battle, libertarian vs. government role views, with one of the regulations’ creators, Emal Bakhtari. The latter asked, “Is that it? Everybody had their say? If you don’t want to build a civilized society, then it’s your problem. But don’t disadvantage those who want to work legally, pay taxes and be protected by the law in case law enforcement agencies attack them. Hope you will understand that one day…” Obviously, it was a naive question: more people had their say which included obscene language.
While Bakhtari is certainly right that the Ukrainian Secret Service which confiscated costly computers illustrates the attacks he mentions, the critique from the commentators is not fully unfounded and does not concern the cryptomarket only. Ultimately, the problem revolves around economic development. Crypto is regarded by the locals as a way of earning additional money in the economy which has been hit hard after the 2014 political turmoil when the former president of the country, Viktor Yanukovich, was ousted. Since then the Ukrainian currency, hryvnia, has lost close to 300% of its value; yet the salaries rate remain inadequate compared with the continuously growing prices. It is not as dire as in Venezuela, where crypto is helping people to combat inflation, but is far from promising.
Concurrently, about 45% of the economy is a shadow one while the current president, Petro Poroshenko, enjoys solely 12,2% of support — an exceptionally low number compared with the 2014 election results when he secured more than 50% of the votes in the first-round. This unfavorable view of the current government — to be fair once again, all other Ukrainian governments were as unfavored — as well as the fact that Ukraine remains a highly corrupt state, stops many from paying taxes. The latter, unfortunately, continue to be subject to embezzlement.
Thus, it is no wonder that the regulatory aspirations are not welcomed by its players who regard the crypto sphere as one of the only available options of making ends meet. And do not trust the government preferring crypto instead. To crown the whole: The rumor has it that Ukrainians are preparing to express their crypto love by erecting a Satoshi Nakamoto statue in the center of Kiev, the Ukrainian capital, right next to the ultimate party place, Arena City. And who knows: perhaps, Nick Szabo will be the one replacing the evangelist of the Russian socialist revolution in 1917, Vladimir Lenin, the statue of which was toppled in 2014.