On April 24, the Finance, Tax, and Customs Policy Committee of Ukraine’s Parliament endorsed the updated draft law on virtual assets and recommended it for a first reading. This version represents a completely new approach to regulation, differing significantly from previous proposals introduced by the Ministry of Digital Transformation and the National Securities and Stock Market Commission (NSSMC).
The NSSMC has been actively involved in shaping crypto legislation and was designated as the main regulatory authority for cryptocurrencies under the 2022 Law “On Virtual Assets. We spoke with Ruslan Magomedov, Chairman of the Commission, live on air to discuss the current state of Bitcoin industry legalization in Ukraine, his personal experience with cryptocurrencies, and his vision for their future.
This article features an adapted and edited version of our conversation with Ruslan Magomedov. You can watch the full interview on Incrypted’s YouTube channel.
On the Updated Draft Law
When the Law “On Virtual Assets” was passed — assigning the Securities Commission and the National Bank as the market’s primary regulators — we were tasked with drafting amendments to the Tax Code to bring the main law into full effect. “On Virtual Assets” law was adopted back in 2022, but it could only take effect after the approval of corresponding tax regulations. Later, however, Ukraine’s candidate status for EU membership prompted a complete overhaul of the legislation.
We received international technical assistance, including support from Ernst & Young experts. With their help, we focused on aligning the draft with MiCA standards — the well-known European framework for crypto regulation. Why MiCA?
The journey of this legislation has been a long one. Initially, there were debates about creating a separate regulator or adopting alternative legal frameworks. Back then, EU membership seemed like a distant prospect. Now, it’s right within our reach.
We have certain obligations, and the closer we move toward the European Union, the more requirements we must meet. By the time we were drafting the latest version of the law, the adoption of MiCA had already become inevitable. So we simply took MiCA as the foundation, and the Commission, together with Ernst & Young and our colleagues from the relevant ministries, created a version of the law based on it.
However, the Commission itself does not hold legislative initiative, meaning our proposal could either be fully adopted, partially implemented, or only taken as a basis. The latter is what ultimately happened.
In my opinion, it is unlikely we will be able to introduce any regulation — particularly regarding taxes or AML (Anti-Money Laundering) measures — that would be significantly softer than MiCA. Not because we don’t want to, but because we simply missed the opportunity to implement crypto regulation earlier. Now, we are in a position where we must implement only what the European Union demands.
That said, if there’s any room for flexibility — for example, to delay the enforcement of certain norms — we will try to use such mechanisms. After all, we must remember: we are living under the conditions of a full-scale war.
This is an important consideration. The country must find a way to function under these realities. That’s why it may actually be better to implement the new legislation after martial law ends, rather than immediately.
Unlike most of the world, Ukraine must factor in the ongoing war when planning regulatory changes. This alone creates an additional barrier to the full operation of crypto legislation. In my view, Ukraine will fulfill all the minimum necessary requirements. There will be clear mechanisms and obligations, and there’s no avoiding them. But until the new regulations fully come into force, I believe the crypto community still has some breathing room.
On Crypto Asset Market Regulators
The first draft submitted to the parliamentary committee was developed by the NSSMC. In line with MiCA and global best practices, it proposed that crypto assets linked to the monetary market — such as CBDCs and assets tied to fiat currencies — would fall under the supervision of the National Bank. Meanwhile, assets related to derivative financial instruments, commodities, and everything else would be overseen by the Commission.
However, after the committee revised the draft for the first reading, the National Bank remained as a designated regulator, but the Commission was replaced with a clause stating that the Ukrainian Cabinet of Ministers would appoint the relevant regulatory authority, with the National Bank’s consent.
As far as I know, there has been no serious discussion about establishing an entirely new regulator. Primarily, this is because of Ukraine’s ongoing European integration efforts. In the EU, it’s clearly defined: regulatory authority lies with institutions responsible for financial markets and central banks. In some countries, where the central bank acts as a mega-regulator — overseeing both the monetary market and the securities market — there is only one regulator. In Ukraine, however, that’s not the case. And it’s appropriate for us to have two separate regulatory bodies.
On the Working Group Behind the Draft Law
At the initial stage, when we first submitted the draft law, it was decided that, in order to expedite the process — to quickly align the law and submit it for the first reading — only state stakeholders would be involved. This included the Securities Commission, the National Bank, the Ministry of Finance, and the Ministry of Digital Transformation, as they were the first to start developing crypto regulation. The wider public was not yet included in this stage.
However, I am confident that by the time we reach the second reading, the discussions will be broader and more detailed. At that point, the crypto community will also be involved.
On the “Taxation Matrix”
Cryptocurrencies, in themselves, are quite a complex tool to understand from an economic perspective. A country that has lived without cryptocurrencies needs to start integrating them in a way that is comfortable for those who are already professionally involved in this field and ensures that it functions effectively. At the same time, industries that have been operating without crypto need to understand how these assets can be taxed.
The “matrix” we developed was an attempt to initiate this dialogue, this discussion. It doesn’t mean that things will only proceed as outlined in the matrix. Of course, there will likely be further input from the Ministry of Finance and the Tax Committee, as it directly concerns tax collection and the replenishment of the state budget. But the matrix was an attempt to present in a more understandable and straightforward way what the Commission is proposing in the draft law we’ve developed.
Thus, if cryptocurrencies become a regular part of our life and the country’s economy, it could impact the revenue that flows into the state budget. Therefore, we are proposing various options for regulation and taxation. However, we emphasize that some practices should be considered with the understanding that certain things might only be implemented after the state of war has ended.
On Crypto Ownership and Seizures
Everyone is currently talking about taxes and focusing on that issue.
But I believe that the real focus should be […] on the mechanisms by which the state will control ownership rights. This is where the mechanisms for asset seizure and restrictions will be realized, for example.This is what I would pay more attention to.
At the moment, this is not well explained in the version that is ready for the first reading. I would advise the crypto community to pay more attention to this section rather than just focusing on taxation. Because if this part is not properly addressed, there won’t be a tax base either. No one will want to engage with crypto if the rules of the game are unclear.
If things keep changing or there are unfriendly regulations from the state’s side, it’s unlikely that anyone will engage with cryptocurrencies, and consequently, there will be nothing to tax. So this is still an open issue.
On Crypto Purchased Before the Law Came Into Force
Everyone understands that this is a problem. It will be difficult to prove the origin. That’s why lawmakers proposed a version where, just once, one could receive a sort of tax amnesty by paying 5% of the sale amount without having to prove the origin of those assets for the first time.
The main thing here is to have amnesty from law enforcement. So that later [they] don’t come and say: “Well, nice job, friend, you paid 5% tax. Now prove to us that it wasn’t obtained through illegal means.” This is what I’m a little concerned about. I think the crypto community needs to take a clear stance on this — that tax amnesty is good, but we need full amnesty so that no one can “harass” us, so that the capital from which we pay the tax for the first time is already recognized as clean and legitimate.
[Note: According to the updated bill, it is proposed to set an income tax (PIT) for individual cryptocurrency owners at 18% plus an additional military tax. In the first year after the adoption of the document, a reduced rate of 5% PIT is expected.]
On Fiat Gateways
In my opinion, it is logical that they should be regulated and opened. That is, once the law is passed, powers are allocated, and the National Bank understands that it controls this, it will likely open this gateway. But again, what it will do is entirely up to the National Bank. [Note: Since the beginning of 2023, direct operations of crypto platforms with hryvnia bank cards have been suspended. As of May 2025, they have not yet been restored.]
On the taxation of mining, staking, and airdrops
Our idea was to exempt mining, staking, and airdrops from taxation in order to encourage the development of these activities. Whether this will ultimately be approved, I don’t know.
Once again, I must emphasize that we are currently living in a country at war. Our economy relies on the financial support provided by our international partners and donors. These partners are very meticulous. They say, “Look, we’re giving you the funds you need to survive and fight for your independence. Yet, at the same time, you’re simplifying and reducing the tax base. We disagree with this, because it seems that you’re granting yourself preferences while taking more from us.” Therefore, whether these provisions will be implemented depends heavily on the opinions of our partners.
On the attitude toward crypto and owning a crypto exchange
A long time ago, I had a crypto exchange business. Just so everyone understands, I’m not some official trying to ban everything—I had a crypto exchange with a partner. This was many years ago. Everything was fine, but each of us had our own priorities in life, and we didn’t dedicate enough time to it, so we decided to shut down the business. Although now, in hindsight, I probably would feel better if I had made a different decision back then.
We still have some bitcoins in a wallet somewhere. I didn’t want to leave […] They were just a few pennies back then […]
So, I don’t view cryptos as either good or bad—I was involved in them once. I’m a technocrat at heart, and I love all new tech. I’m all for embracing innovation, with both hands, with all my limbs. But after sitting in a government position for a while, I began to understand that there’s another side to the coin—from the perspective of the state.
On the Future of Crypto
Everyone agrees that crypto have already become an integral part of our lives. In my view, a symbiosis will eventually occur: traditional money, in its pure form, will disappear and evolve into a type of virtual asset—not necessarily a CBDC.
You can compare this to touchscreen technology. If you remember, touchscreens were invented back in the 1990s or even earlier. But until Steve Jobs made the technology truly usable, it was pushed into all sorts of devices where nobody really wanted it—and no one was willing to pay for it.
The same thing is happening with crypto today. It’s already here, already being used, but for most governments, it’s still like touchscreens were for humanity in the ’90s: close, but not quite the breakthrough moment yet. We’re still waiting for the equivalent of the first iPhone that will make crypto truly mainstream. I believe that moment is very near—likely before the end of this decade.
At that point, states will finally recognize the benefits of blockchain and virtual assets and will start actively encouraging their adoption.
Right now, governments worldwide have not yet completed the journey of understanding how these technologies can serve them. There’s pressure from consumers—millions of people are already using [crypto] and shaping public opinion—but there’s also hesitation from states. On one hand, they want legalization because it means more control and more taxes. On the other hand, they fear losing the control they already have. […] This fear pushes governments to act cautiously.
So far, we haven’t seen a global boom in crypto legislation. Yes, there are a few “Meccas” for crypto development, but they are exceptions—and mostly countries with strong, resilient economies that can afford to take risks. If something goes wrong in their regulatory experiments, they have the financial strength to weather the storm.
Ukraine, sadly, is in a much more vulnerable position right now, being at war. Any misstep in regulating the crypto market could be critical. The economy might not survive it—and we must take that into account. […]
Therefore, it might actually be wiser to wait a little. Perhaps now is not the right time for full-scale crypto legislation. In my opinion, real implementation of virtual asset taxation and full regulatory rollout will only be possible after the end of the full-scale war, when the risks are lower.