Ukraine Advances Cryptocurrency Taxation and Legalization Strategy

In a significant step towards embracing the digital age, Ukraine's parliament has approved the first reading of a bill aimed at legalizing and taxing cryptocurrencies. This move aligns with the country's ambition to establish cryptocurrency as a sustainable foundation for its post-war economy.

The bill, which is still in its draft stages, proposes to exclude crypto-to-crypto and stablecoin transactions from taxation. It also introduces a total tax of 23% on crypto profits, an 18% income tax, a 5% military levy, and a preferential 5% tax on fiat conversion profits for the first year.

Ukraine has already shown robust participation in decentralized finance (DeFi) and centralized exchange activities, particularly among institutional investors. The bill's second reading will focus on oversight mechanisms and compliance enforcement, with early drafts suggesting a more flexible framework similar to those seen in the EU and Asia.

However, several questions remain unanswered, such as which agency will serve as the main regulator. The government is considering cryptocurrency as a means to revive the economy, and the bill's approval may increase the nation's attractiveness to fintech companies and cryptocurrency investors.

If the law is approved in its final form, the main regulatory authority for the legalization and taxation of cryptocurrencies will be the European Central Bank (ECB) together with national supervisory authorities. The ECB acts as the primary regulator and is responsible for financial stability in the EU, including crypto assets under the MiCAR regulation.

It is still unknown whether the National Bank of Ukraine (NBU) or the National Securities and Stock Market Commission will serve as the main regulator. Lawmaker Yaroslav Zhelezniak announced the bill's approval via Telegram.

Ukraine's commitment to cryptocurrency is evident, with the country ranking eighth globally in the Chainalysis Global Crypto Adoption Index in 2025. The move towards legalizing and taxing cryptocurrencies is a testament to Ukraine's forward-thinking approach and its determination to rebuild its economy on a solid digital foundation.