The Ukrainian parliament has taken a milestone step by passing a law that legalizes and regulates Bitcoin (BTC). The bill illustrates the government’s official position on the digital asset, which was previously unknown. The bill was drafted a year ago in 2020. It was supported by a total of 276 MPs, with only 6 against. The law was officially passed on September 8, 2021.
How has it been so far and what purpose does the law legalizing Bitcoin serve?
Until recently, cryptocurrencies existed in Ukraine in the so-called “gray zone”, that is, they were legal, but not regulated. Ukrainians could buy and exchange them, while cryptocurrency exchanges and companies were under strict state surveillance and fell prey to suspicions of illegal activity. With the introduction of the law legalizing Bitcoin, the lack of regulation came to an end. Here is what the goals were behind the introduction of the bill.
It can be assumed that the main purpose of this law is to clarify what digital assets are and thus protect the citizens who hold them. Until now, Bitcoin holders possessed something that was not legal, but not illegal either. This state of affairs created confusion and encouraged criminal activity, as well as increased the wrongful suspicion of collection authorities towards companies using BTC.
Now that the law has been enacted, the courts can properly protect individuals and companies using blockchain technology. The law provides tax transparency and officially allows Bitcoin companies to operate within the borders of Ukraine. It also sets guidelines for how Ukraine may regulate Bitcoin in the future.
Global trend for legal regulation of Bitcoin
Ukraine has joined the list of countries that have decided to regulate cryptocurrencies. Recently, El Salvador became the first country to adopt Bitcoin as a full-fledged means of payment. In the U.S., you can also see a trend towards regulating cryptocurrencies.
The news coming from Ukraine is definitely a step in the right direction. It should also be noted that in order for Bitcoin to fully prosper in a given country, too many regulations cannot be imposed on it. This is because it could lead to stifling innovation. Bitcoin is still in the development stage. For now, however, all indications are that it is moving in the right direction towards becoming the world’s reserve currency.