The National Securities and Stock Market Commission of Ukraine Proposes a 23% Tax Rate on Digital Assets
The National Securities and Stock Market Commission of Ukraine (NSSMC) has just proposed a 23% tax rate for certain transactions involving digital assets. This sum includes 18% personal income tax and a 5% military levy. The action comes as the government works to develop a more structured legal framework for cryptocurrency assets, with legalization slated to begin in early 2025.
JUST IN: UKRAINE’S FINANCIAL REGULATOR PROPOSES A 23% TAX ON CERTAIN CRYPTO TRANSACTIONS AS PERSONAL INCOME, WITH EXEMPTIONS FOR CRYPTO-TO-CRYPTO TRADES AND STABLECOINS.
Source:@cointelegraph https://t.co/xGGlkJGP4p 
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Are Ukrainians Already Used to Crypto?
It’s not without reason that this tax has drawn mixed reactions. In the middle of the ongoing conflict, crypto has become a financial outlet for many citizens. When access to traditional banking services was disrupted, many people turned to digital assets to simply buy basic necessities, receive humanitarian aid, and maintain the value of their money. Even global humanitarian groups rely on cryptocurrency since it allows for faster and more efficient donation processing. So it’s logical to wonder if such a hefty tax will make it difficult for folks who are simply trying to live.
The draft regulation does not apply to all crypto transactions. The 23% tax will only be imposed on crypto conversions to fiat currencies, the use of crypto to purchase goods or services, and transactions that generate net profits. Meanwhile, crypto-to-crypto transactions and stablecoins backed by foreign currencies or other assets will be exempt from tax. So, if someone exchanges Bitcoin for Ethereum, it’s safe. But if you exchange it for Hryvnia to buy groceries, get ready for tax deductions.
Ukraine Eyes Crypto to Join Global Digital Economy
The Ukrainian government has announced plans to legalize crypto as part of its financial system modernization strategy since January. In addition to attracting investment, they also want to align policies with European Union standards. This should help Ukraine to be more prominent on the world digital economy map. Several industry players, meanwhile, lament the high suggested tax rate since it would drive crypto transactions back into the dark lane.
On the other hand, neighboring countries such as Russia are also actively utilizing digital assets. Last March, CNF reported that the country had started using cryptos like Bitcoin, Ether, and Tether in its oil trade with India and China. Cryptos are being used to avoid economic sanctions from the West and seek more flexible cross-border payments. In fact, the Governor of the Russian Central Bank, Elvira Nabiullina, admitted that the current global conditions are forcing Russia to open up to digital payment systems.
Of course, now it remains to be seen how the Ukrainian parliament responds to this tax proposal. Will it be approved as is, or will it be reviewed taking into account the voices of citizens and industry.