Ukraine Adopts Law To Legalize Cryptocurrencies Amidst Escalating Tensions With Russia

Ukraine has moved to announce that it has legalized cryptocurrencies as crypto donations to Ukrainian volunteer and hacking groups soared as tensions with Russia reach a crescendo, with fears of an impending Russian invasion growing by the day. 

The move comes as several Central Banks and the IMF have expressed their reservations against cryptocurrencies and their unregulated use. 

Help Bring Crypto Into The Mainstream 

Ukrainian Vice Prime Minister Mykhailo Fedorov announced on Twitter that the Ukrainian parliament had legalized cryptocurrencies, stating that the new law would bring the sector “out of the shadows.” He further added that the new law would help protect Ukrainian assets while also protecting the general population from fraud or any abuse. 

The Vice Prime Minister posted on Twitter, stating, 

“Ukraine is already in top-5 countries on cryptocurrency usage. Today we made one more step forward: Parliament adopted a law on virtual assets! This will legalize crypto exchanges and cryptocurrencies, and Ukrainians could protect their assets from possible abuse or fraud.”

Earlier, Ukraine had tightened checks, hoping to curb money laundering, with domestic cash transfers requiring ID verification and cross-border transfers subject to mandatory monitoring. 

Bitcoin Donations Soar Under Shadow Of War 

Bitcoin researcher Elliptic had recently published a report, stating that BTC donations to Ukrainian hacker and volunteer groups have seen a significant jump, with Russian troops massing at the Ukrainian border. Donors have been using cryptocurrencies rather than traditional banking channels for these donations, fearing that financial institutions could come under international pressure and block the funds. 

Some of the groups donated to have supplied some equipment to government forces, with the groups having received over $550,000 worth of cryptocurrency in 2021. Elliptic stated, 

“Cryptocurrency has proved to be a robust and growing alternative (to traditional currency) – especially when it comes to donations from other countries.”

IMF And Central Banks Jittery 

Several Central banks and financial institutions have expressed their reservations about cryptocurrencies. Kristalina Georgieva, IMF Managing Director, has also been fairly vocal in her opposition to virtual currencies and their growth in popularity. The IMF Managing Director stated that cryptocurrencies would be no match for Central Bank Digital Currencies (CBDCs). 

The Deputy Governor of the Reserve Bank of India also made a strong case against cryptocurrencies, calling them a threat to the financial sovereignty of a country, and describing them as worse than a Ponzi scheme. The Bank of England has also asked firms and consumers dealing with cryptocurrencies to be “cautious.” 

Previous Attempts To Legalize Cryptocurrencies 

This is not the first time that Ukraine has made an effort to legalize cryptocurrencies. Back in 2021, the Ukrainian Parliament had adopted a draft law on virtual assets which effectively legalized all types of cryptocurrencies and other virtual assets within the country’s borders and economic and commercial jurisdiction. However, the bill was vetoed by President Zelensky. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.