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After years of drafting, debates, revisions, and months of limbo, Ukraine’s long-awaited bill to legalize cryptocurrencies and set out taxation rules for crypto transactions has finally reached parliament — and cleared its first reading.
So, what exactly does the bill propose? What happens next? And when can we expect the revised version to move on to its second reading? Let’s break it down.
Context
Ukraine’s path toward cryptocurrency legalization has been dragging on for years. A breakthrough seemed to come in 2022, when the “On Virtual Assets” bill was approved by parliament and signed into law by President Volodymyr Zelensky.
However, the law never took effect. For that to happen, amendments to the Tax Code first had to be passed — and at the time, those amendments weren’t ready. Later, lawmakers decided to rewrite the existing legislation altogether, aligning it with the EU’s MiCA regulation after Ukraine was granted EU candidate status.
This process eventually produced two competing draft laws from different regulators: the National Securities and Stock Market Commission (NSSMC) and the Ministry of Digital Transformation.
Yet neither of the competing drafts managed to secure a decisive win. Both parliament and the National Bank rejected them in their original form. Instead, a new — third version emerged. This latest draft gained the backing of the parliamentary Committee on Finance, Tax and Customs Policy in April, and in September lawmakers in the Verkhovna Rada passed it in the first reading.
What Does the New Bill Propose?
Regulator and Key Provisions
The draft law lays down the foundation for regulating the crypto industry, introducing a broad set of definitions and requirements for service providers.
In particular, virtual assets are classified into three categories:
- e-money tokens — pegged solely to the value of one official currency;
- asset-backed tokens — pegged to the value of any other civil asset or right, including a combination of several official currencies;
- other tokens — which don’t fall into the above categories and will be defined by the regulator.
One key detail is that the regulator itself has not yet been firmly established. The document currently names the National Bank of Ukraine (NBU) and/or another body to be designated by the Cabinet of Ministers. The latter is expected to become the primary regulator of Ukraine’s crypto market.
The wording “and/or” is especially noteworthy. As Daniil Voloshchuk, Senior Lawyer at Juscutum, told Incrypted, regulation could remain under the NBU, or responsibilities could be shared between multiple bodies.
It’s also worth noting that the regulator will be granted fairly broad powers. These include the ability to conduct on-site inspections and investigations, as well as access premises — excluding private homes or other personal property — in order to “obtain documents and other information in any form.”
Service Providers
Under the bill, crypto-related service providers — such as exchanges and trading platforms — will be required to register with the regulator and submit annual reports on their activities. Failure to file, or providing false information, could result in fines.
Notably, the draft does not impose on providers the role of acting as tax agents for their clients — a controversial requirement that appeared in earlier versions of the legislation and was widely criticized by experts interviewed by Incrypted.
Taxes
This is the part most crypto holders are likely to pay close attention to. For individuals, the bill sets an 18% income tax on annual profits (calculated per calendar year), plus a 5% military levy. Importantly, during the first year of the law’s implementation, a preferential 5% tax rate will apply — without requiring proof of past acquisition costs.
Lawmakers explained this as an incentive for crypto owners to step out of the shadows.
At the same time, the following will not be taxed:
- income from exchanging one virtual asset for another;
- profits from selling crypto worth less than one minimum monthly wage;
- issuance of, or free receipt of, tokens directly from an issuer.
For legal entities, profits will be taxed under general corporate rules at the standard 18% rate.
What’s Next?
The bill will now undergo revisions ahead of its second reading. Lawmaker Yaroslav Zheleznyak has repeatedly stressed that the text could change significantly.
In Ukraine, this is not unusual, say legal experts. According to parliamentary rules, hundreds of amendments can be submitted between the first and second readings — a standard process for high-profile and complex legislation, notes Igor Yasko, managing partner at the law firm Winner.
Estimates suggest the text could change by 50–70% at this stage, especially when multiple government agencies are involved in discussions.
“In the crypto space, the risk is even higher,” Yasko adds, “due to the novelty of the sector, efforts to align Ukrainian law with the EU’s MiCA regulation, and disputes over actual market oversight and control.”
Which specific provisions might change remains unclear. As the bill’s initiator, Danilo Hetmantsev, head of the parliamentary Committee on Finance, Tax and Customs Policy, told Incrypted:
“We have no strict boundaries on what we can or cannot change. Every provision will be discussed.”
Igor Yasko notes that basic definitions, general regulatory principles, and investor protection provisions usually remain unchanged. However, according to him, significant adjustments could be made to taxation rules, KYC/AML procedures, and sections concerning regulators and their powers.
In any case, the issue of the market regulator is expected to be resolved before the second reading. The current draft positions the National Bank of Ukraine (NBU) as the primary — and effectively sole — regulator of the entire virtual asset market. Daniil Voloshchuk points out that the NBU may not yet have sufficient expertise across all aspects of virtual asset activities:
“It would make more sense to establish the National Bank of Ukraine as the main regulator in the financial sphere while assigning other bodies a role in promoting the growth of the digital economy.”
He added that market participants anticipate substantial changes before the second reading so that the new law not only formalizes the rules but also genuinely encourages innovation in Ukraine. According to Voloshchuk, other fundamental amendments should include:
- limiting overly broad powers of the regulator in collecting information, which currently pose risks to business and innovation. Requests should be restricted to specific inspections, with emphasis on the technological specifics of the virtual asset market, such as the possibility of providing information in blockchain or smart contract data formats.
- allowing token issuance pegged to assets and e-money by all licensed financial institutions, ensuring competitiveness in the international market. EU experience shows the effectiveness of an open token issuance market for all credit institutions, not just banks; current Ukrainian legislation narrows this list.
- maintaining flexibility for Diia.City residents, allowing them to work with virtual assets without losing their status or tax benefits. The proposed rule forcing Diia.City resident companies to switch to the general taxation system after any virtual asset transaction undermines trust in the special legal framework and contradicts declared principles of stability and predictable tax burdens over 25 years.
Despite its foundational importance and positive regulatory advances, the draft law contains several areas that require revision or, in the best case, complete overhaul, Voloshchuk emphasizes:
“The aspects outlined above are concrete examples of specific shortcomings, but the draft law contains many similar gaps.”
When Will the Second Reading Take Place?
Formally, the minimum interval between the first and second readings is 14 days. In practice, however, the average gap ranges from 1.5 to 6 months — sometimes even longer, notes Igor Yas’ko.
The revision process could take two to three months, predicts Yaroslav Zheleznyak. Lawmakers aim to bring the bill to its second reading before the end of the year, Danilo Hetmantsev told Incrypted.
“There is hope that work in the specialized committees before the second reading will result in positive changes. Committee members engaged directly with market participants and received feedback on these and other provisions of the bill prior to the first reading,” emphasized Daniil Voloshchuk.
Yet the key question is not just whether market participants will be heard, but whether they will see the final version of the law at all.
