Ukraine passes the Cryptocurrency Act: Bitcoin is not legalized, but the trading market is legalized

The recent political situation in Ukraine has aroused investors’ caution. Ukraine announced the passage of the Cryptocurrency Act, recognizing the legalization of digital currency transactions. This is exactly the market that Russia prohibits.

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Bitcoin falls sharply amid turmoil in Ukraine

The political situation in Ukraine remains unclear. There are reports of Russian artillery shells being fired into Ukraine, but there are also reports that the conflict is just a small-scale conflict with rebels and pro-Russian factions in eastern Ukraine, and tensions continue. Meanwhile, the United States has been fanning the flames, with U.S. President Joe Biden telling reporters at the White House on the 17th that "a Russian invasion could happen within days."

Although the facts are still being distorted and mutated in various reports, such news has already had a great impact on various financial markets.

Especially for large institutions, the US stock market fell across the board last week, with 85% of the stocks in the S&P 500 falling. The Dow Jones Industrial Average also fell 1.8% to $622.24. The Nasdaq 100 fell further, down about 3%.

As a hedge, Bitcoin also has a great impact. ChainDD's market data shows that Bitcoin has fallen by more than 13% in 5 days, from $44,000 to $38,000 on February 20. Ethereum (ETH) fell below $3,000, and Ripple (XRP) fell below $0.8.

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Ukraine's Deputy Prime Minister: Our country ranks fifth in the world in cryptocurrency usage

Meanwhile, Ukrainian Deputy Prime Minister Fedorov tweeted:

“Ukraine is already in the top 5 countries in the world in terms of cryptocurrency usage. Today we took another step forward: the parliament passed the law on crypto assets! This will legalize crypto exchangers and cryptocurrencies, and Ukrainians can protect their assets from possible misuse or fraud.”

Source: Twitter

However, the deputy prime minister somewhat underestimated the country's crypto market. According to the New York Times, the Eastern European country processes more cryptocurrency transactions every day than its fiat currency, the hryvnia. Moreover, according to data from consulting firms, the 2021 Global Cryptocurrency Adoption Index ranked Ukraine fourth in the world, behind Vietnam, India and Pakistan.

“In Ukraine, the virtual asset market can become a powerful sector of the digital economy. Thanks to the passage of this bill, we have every opportunity to become a leading country in the development of business in this innovative field,” Fedorov said in the interview.

ChainDD learned that the Cryptocurrency Bill has received the support of the Ukrainian President. The law will allow the launch of a legal market for crypto assets in Ukraine. According to the changes, the Ukrainian National Securities and Stock Market Committee will regulate the crypto asset market. After the vote came out, Fedorov said:

“The new law will provide more opportunities for business development in our country. Foreign and Ukrainian crypto companies will be able to operate legally, while Ukrainians will have easy and safe access to the global crypto asset market. Market participants will receive legal protection and have the opportunity to make decisions based on open consultation with government agencies. There will also be a more transparent mechanism for new categories of investment assets.”

Source: Ukrainian government official website

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The Cryptocurrency Act Does Not Mean Bitcoin Legalization

Ukraine’s parliament submitted a proposal to legalize cryptocurrencies last September, but President Volodymyr Zelenskyy vetoed the bill in October because he believed Ukraine did not have the infrastructure in place.

Moreover, it is worth noting that the so-called "Cryptocurrency Act" passed this time does not recognize Bitcoin or other cryptocurrencies as legal tender.

Unlike El Salvador's direct legalization of Bitcoin, Ukraine chose another path.

Under Ukraine’s new Cryptocurrency Law, the National Securities and Stock Market Committee of Ukraine will be responsible for the following tasks:

1. Formulate and implement policies in the field of crypto assets;

2. Determine the circulation order of crypto assets;

3. Issue licenses to crypto asset service providers;

4. Carry out supervision and financial monitoring in this regard.

Wikipedia introduces Fedorov, the youngest Deputy Prime Minister of Ukraine, who was born in 1991 and is only 31 years old, as follows: Mykhailo Albertovych Fedorov (Ukrainian: Михайло Альбертович Федоров) is a Ukrainian politician and businessman, currently serving as the First Deputy Prime Minister and Minister of Digital Transformation. On August 29, 2019, Fedorov was appointed Minister of Digital Transformation in the Honcharuk government. Fedorov's most important project as minister is the "Smart Nation" project, whose goal is that by 2024, 100% of government services must be online, and 20% of services must be completed intelligently.

As the Minister of Digital Transformation, Fedorov is the second El Salvador and has been very active on Twitter. After the "Cryptocurrency Bill" was passed, he tweeted that Ukraine should vigorously develop cloud services.

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Does the crypto market affect the political situation?

Liandede thinks it is unlikely.

Although Fortune magazine analyzed, "Government officials hope that the new law will attract more foreign investment into Ukraine's booming cryptocurrency market, although tensions with the country's less crypto-friendly neighbor Russia may curb capital inflows."

However, as ChainDD mentioned in previous reports, Russia has taken an extremely friendly turn towards the crypto market, especially after Putin said that "Russia has unique advantages in mining." Although there are certain restrictions on the trading market, other aspects have shown an upward trend.

Russia is one of Ukraine’s largest trading partners, and this conflict will inevitably affect Ukraine’s crypto market. The Cryptocurrency Act actually recognizes the legalization of digital currency transactions, which is exactly the market that Russia prohibits.

As Fedorov said: “I want to remind them (Russia) that in the field of crypto, regulation is more effective than bans.”