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Ukraine legalizes bitcoin and cryptocurrencies

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Ukraine is the fifth country in as many weeks to establish some ground rules for the cryptocurrency market, a sign that governments around the world are realizing that Bitcoin will stay.

In an almost unanimous vote, the Ukrainian parliament passed a law that legalizes and regulates cryptocurrency. The bill was launched in 2020 – and is now on President Volodymyr Zelenskyi’s desk.

To this day, crypto is in a legal gray area in Ukraine.

Locals were allowed to buy and exchange virtual currency, but companies and exchanges that traded crypto were often under close scrutiny by law enforcement agencies.

According to the Kiev Post, authorities tend to take a combative stance when it comes to virtual cash, viewing it as a “fraud”, looting crypto-related companies and “often confiscating expensive devices for no reason”.

In August, for example, the Security Service of Ukraine (SBU) blocked a network of so-called “clandestine cryptocurrency exchanges” in the capital Kiev. The SBU claimed that these exchanges facilitate money laundering and ensure the anonymity of transactions.

The new legislation also provides certain fraud protection measures for those who own Bitcoin and other cryptocurrencies, and for the first time for the Verkhovna Rada, lawmakers have tried to define the core terminology in the world of cryptocurrency. When signed by the President, virtual assets, digital wallets and private keys are terms that will be enshrined in Ukrainian law.

Unlike El Salvador’s move this week to adopt Bitcoin as legal tender, Ukraine’s crypto law neither facilitates the adoption of Bitcoin as a legal tender nor puts it on a par with the hryvnia, the country’s national currency.

However, today’s vote by the former nuclear power is part of a broader push by Kiev to move towards Bitcoin.

The country plans to open the cryptocurrency market to businesses and investors by 2022, according to Kyiv Post. Top state officials have also touted investors and venture capital funds in Silicon Valley with their crypto street credit.

During an official state visit to the US last month, President Zelenskyi spoke of Ukraine’s emerging “right-wing innovative virtual asset market” as an investment selling point, and Mykhailo Fedorov, the Ukrainian minister for digital transformation, said the country was modernizing its payments market National Bank can issue digital currencies.

Read more about cryptocurrencies from CNBC Pro

But for Bitcoin supporters like Jeremy Rubin, Ukraine’s new law and political promises like this don’t mean much.

“Ukraine’s improved legal status for Bitcoin is a commendable symbolic measure that we are advancing towards a world that universally respects the rights of individuals,” said Rubin, CEO of Bitcoin research and development laboratory Judica. “But it’s only symbolic – Bitcoin seeks no permission or forgiveness in its mission to protect persecuted communities from unjust governments.”

Latest domino to fall

Ukraine joins a long list of countries that convert Bitcoin into national law.

Just this week, El Salvador was the first country to introduce Bitcoin as legal tender and have it on its balance sheet. President Nayib Bukele has essentially tied his political fate to the outcome of this nationwide Bitcoin experiment.

Two weeks ago, Cuba – a notoriously conservative government that is still in the traditional Marxist way – passed a law to recognize and regulate cryptocurrencies, citing “reasons of socio-economic interest”.

Last month, the US proposed $ 1 trillion rules for crypto “brokers” in its infrastructure bill, and a new German law now allows funds previously barred from investing in cryptocurrencies with up to 20% virtual currencies how to assign bitcoin.

Panama appears to be on deck next. The Central American country is working on a draft of its own cryptocurrency law.

This list is hardly complete – it just seems to be the latest pattern of dominoes falling as more governments recognize the resilience of cryptocurrencies like Bitcoin.

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