Ukrainian legislators voted to legalize cryptocurrencies Thursday, making it easier to use them in the country as it teeters on the brink of war with Russia.
Verkhovna Rada, the Ukraine Parliament, passed bill no. 3637, or the Law of Ukraine on Virtual Assets Thursday overwhelmingly with 272 votes, legalizing cryptocurrency in the country of more than 41 million. The bill only required 226 yes vote to pass.
Mykhailo Federov, Ukraine’s minister of digital transformation tweeted that the move will reduce corruption risks and prevent fraud in the burgeoning exchange of digital currencies.
The Ukraine bill was the second legalization attempt in five months. In early October, a bill calling for the creation of a new independent regulatory body to oversee crypto exchanges was vetoed by President Volodymyr Zelensky.
Zelensky said that the creation of a new agency wasn’t in the country’s budget and said the bill should be revised, according to the Kyiv Post. Under Zelenksy’s plan virtual assets will be regulated by the country’s National Securities Commission, the National Bank and the Ministry of Digital Transformation.
Ukraine Moving Towards Cryptocurrency and War
Ukrainians have raised thousands of dollars for volunteer groups by crowdfunding bitcoin over the past few months, according to a recent study by Elliptic.
The majority of donations were received through traditional payment methods, such as bank wires and online payments services, Elliptic said, but “cryptocurrency has proved to be a robust and increasingly popular alternative.”
Activists have deployed crypto for such things as military equipment, medical supplies and drones and a facial recognition app that allows users to identify “militants, Russian mercenaries and war criminals.”
Ukraine’s adversary Russia, has tightened controls on crypto exchanges even as the country became the third largest center for bitcoin mining in the world. It ranks behind the U.S. and Kazakhstan, as of last August, Bloomberg reported, citing data from Britain’s Cambridge Center for Alternative Finance.
Russia has massed more than 100,000 troops at the Ukraine border, with the country sending another 7,000 troops this week, the latest provocation in a cold war that could turn hot at any moment.
Ukraine had already embraced bitcoin before Thursday’s bill passing, but digital currencies existed under strict government controls.
Citizens were allowed to buy and exchange digital currencies, but companies and exchanges dealing in crypto were scrutinized heavily by law enforcement.
Crypto Legislation Leads to Wider Adoption
The level of crypto adoption has varied across the world. Some countries, like El Salvador, which accepts bitcoin as legal tender, have jumped fully into the digital space. Others, like India, keep the digital currency at arms length by imposing 30% taxes on crypto profits.
India has not yet introduced legislation governing digital assets. Ironically, its tax framework appears to be driving adoption. WazirX, India’s largest crypto exchange, has seen a nearly 30% increase in daily sign-ups since February 1 when India introduced the tax.
In the U.S., the state of Colorado announced that it will start accepting cryptocurrencies for tax and other payments by the end of the summer.
But critics remain. Famed investor Charlie Munger likened cryptocurrencies to a venereal disease earlier this week.
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