CRYPTOCURRENCY IN UKRAINE — CONSULTATION OF A LAWYER

On September 8, 2021, the Verkhovna Rada of Ukraine adopted the Law of Ukraine "On Virtual Assets", and on February 17, 2022, the Law was signed by the President. As of today, the Law has not yet entered into force, as it is necessary to make changes to the Tax Code.

The adoption of laws on granting official status to virtual assets in Ukraine has been expected by the community in recent years, because technologies and innovations currently play a key role in the world economy, and the state must increase its competitiveness on the world market and be open to investors.

Cryptocurrency payments in Ukraine? Yes or no?

"Yes, the market of virtual assets has existed in Ukraine for at least 5 years, but the entire period of existence is outside the legal field. At the same time, the analysis of the provisions of the Law of Ukraine "On Virtual Assets" gives reason to believe that a significant share of the virtual assets market will remain outside the legal field, even after the said Law enters into force.

According to the provisions of the law, providers of services related to the turnover of virtual assets are exclusively business entities - legal entities that conduct one or more of the types of activities defined by the law in the interests of third parties (clause 8, part 1, article 1 ).

At the same time, the law establishes a list of requirements for the creation of legal entities-suppliers (impeccable reputation of managers, accountants), obtaining licenses and their annual renewal according to the established requirements, a fixed minimum amount of authorized capital depending on the activity of the service provider. - notes the cryptolawyer

How to buy a house, car, other real estate or asset for crypto (bitcoin, for example) in Ukraine?

The crypt lawyer also notes that "According to Part 3 of Art. 9 of the Law, providers of services related to the turnover of virtual assets, at the request of other participants of the virtual assets market, are obliged to provide the necessary, accessible and reliable information about themselves, the rules of their work, an exhaustive list of the conditions for carrying out operations, as well as about the available protection options rights of users - other participants of the virtual asset market.

The legislator:

1. only recognizes centralized exchanges (service providers)
2. intends to establish full control over the turnover of virtual assets in Ukraine, thus effectively not recognizing the existence of Decentralized Crypto Exchanges.

However, as early as 2009, the legal support of cryptocurrencies in Ukraine assumed that the primary goal of creating virtual assets was to obtain freedom while working with such assets, the absence of control by the state, and therefore the majority of people who associate their activities with virtual assets, use decentralized exchanges. The turnover on such exchanges takes place without control from the exchange, respectively, without any control from the state, but only between the parties based on the conclusion of a smart contract according to established algorithms.

"Each investor, user, owner of virtual assets does not have risks related to the blocking of his account (crypto wallet), for checking and blocking the transaction with the asset, in the case of working with a decentralized exchange." - a lawyer for unlocking a crypto wallet

Indeed, the state should have some access to information about the turnover of virtual assets, accordingly, centralized exchanges should exist, because they have their advantages (for example, the risk of losing an asset due to fraudulent actions is lower), but if a country starts to legalize virtual assets, gives them a certain status, but at the same time leaves a significant part of the virtual assets market in the shadow sector - this will not lead to the goal that should be achieved through the adoption of such legislation, therefore, it must be taken into account during the adoption of subsequent legislative acts.

At the same time, state control in the case of unregulated crypto exchanges may exist, but in the form of a certain voluntary declaration of participants and the possible creation of a specialized self-regulated association of market participants, as it exists, for example, in the stock market.

Thus, such a self-regulated organization of professional participants of the crypto market can exist as a non-profit association of market participants who conduct professional activities on the cryptocurrency market, and produce general standards and rules for conducting such activities for all participants. In this case, the state will interact with such self-regulatory organizations and produce certain standards and rules of flexible regulation, which will positively affect the development of the crypto market.

Information about cryptoassets is actively distributed in social networks, when viewing web portals and in society in general. It is an obvious fact that when getting acquainted with crypto-assets and the first actions during the primary money transfers, a person prefers the rated and most well-known crypto-asset turnover service providers, among such providers is Binance.

In September 2022, Binance (represented in Ukraine by BI.EN. TECHNOLOGY SERVICES LLC) and the Diya application began cooperation on the registration of citizens of Ukraine in the Binance relationship/web portal. With such cooperation, the registration process for new users is simplified, the "Action" application provides copies of digital documents (foreign passport/passport of a citizen of Ukraine) with your consent, and the automated process is fast, that is, digitized. However, such cooperation and ease of registration fully exposes you to the Ministry (State) as a crypto exchange user.

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First, the "Action" application and, accordingly, all information and digital documents of a citizen are at the disposal of the Ministry of Digital Transformation of Ukraine. Unlike registration on other crypto exchanges or at least on the Binance crypto exchange without using "Diya", information about your registration as a user will be held only by a legal entity with a private form of ownership, which is also registered in other countries.

Secondly, for the purpose of cooperation between Binance and Diya, the crypto exchange has a registered under Ukrainian law LLC "B.EN. TECHNOLOGY SERVICES", therefore, documents regarding the citizen-user will be provided from the State body to the Ukrainian legal entity. The law enforcement body can make a request to the state body (Ministry), get confirmation about the registered citizen and make temporary access to the electronic information systems that are in the possession of the specified legal entity regarding the activity of the registered user on the crypto exchange.

What are the taxes on cryptocurrency in Ukraine? But what is the responsibility for not paying taxes on crypto?

This, in theory, can lead to the incrimination of accusations of non-payment of taxes in relation to the income received from participation in crypto-asset trading. If the registration takes place without authorization through Diya, the state will not have any information about the number of citizens registered on such a crypto exchange, and in the case of the need to obtain such information, law enforcement agencies will need to make requests within the framework of international cooperation, which makes the process of manipulation impossible during the investigations

At the same time, making a request through international cooperation requires justification for obtaining such information, and from practice, such cases will most likely be just a manipulation of citizens, that is, unfounded and will not be able to be implemented through international cooperation.

Therefore, if a citizen intends to start getting acquainted with crypto-assets or generally intends to purchase crypto-assets, it is necessary to choose a safe way of such acquaintance and at the first stages it is more appropriate to use portals for the exchange of fiat funds for crypto-assets without detailed authorization and without notifying the state authorities.

Legal assistance on crypto issues in Ukraine and abroad

How to find a good crypto lawyer? But what legal issues can arise when owning, using and selling cryptocurrency?

The services of the Law Company "Prikhodko and Partners" include:

• Legal use of cryptocurrency in Ukraine
• Legalization of income received from crypto operations in Ukraine and investments in cryptocurrencies
• Bitcoin and Ethereum mining in Ukraine
• Consulting on IEO
• Taxation of withdrawal of assets in fiat money, assistance and consulting
• Legal support of ICO and IEO projects
• Structuring of blockchain companies, tax optimization, Diya City
• Assistance to crypto investors in Ukraine and abroad
• Assistance of a lawyer on investment in cryptocurrencies
• Registration of ICO/IEO/DeFi and Mining`

Legal company "Prikhodko and Partners" - professionally provides legal support for cryptocurrency operations, unlocking crypto wallets and protecting their owners before law enforcement agencies. The assistance of our cryptocurrency lawyer is always professional. We guarantee you full confidentiality.