Ukraine Central Bank Opposes Crypto Bill Over Sovereignty and Stability Risks

On November 5, the National Bank of Ukraine announced it cannot endorse the Ukraine crypto bill No. 10225-d in its current iteration, pointing to three key threats to economic security, financial stability, and monetary sovereignty. This stance increases pressure on legislators to amend the legislation prior to a final vote.

While the central bank supports establishing a legal framework for cryptocurrency taxation and trading based on international benchmarks, the European Union’s MiCA framework, and International Monetary Fund guidelines, its objections are directed squarely at the specific provisions of the current draft.

The NBU’s Opposition Puts Ukraine Crypto Bill Legalization Effort Back Into Revision

According to the central bank, the final text omitted several core agreements previously reached during consultations with lawmakers, industry representatives, and regulators. The bank received the document late Tuesday, right before a parliamentary committee greenlit it for a second reading, describing the drafting procedure as lacking transparency.

Regulators remain concerned that the bill would open the market prematurely without providing them with sufficient safeguards to manage potential risks. As CoinDesk reported regarding the disagreement, the bank insists on modifications before parliament moves forward with rules governing crypto trading and taxation.

Foreign Tokens Raise Concerns Over Oversight and Regulatory Gaps

A primary contention is that the bill could permit foreign-issued tokens to enter Ukraine even when lacking proper supervision in their countries of origin. The bank cautioned that some could operate akin to electronic money, potentially threatening monetary sovereignty and financial stability.

The regulator seeks the authority to evaluate these tokens and restrict their circulation when necessary, mirroring the oversight powers it exercises over domestic issuances. Granting foreign assets simplified access, the bank contends, would allow them to bypass standards imposed on comparable Ukrainian assets, producing inconsistent regulations and opportunities for regulatory arbitrage.

Highlighting issues such as foreign-token entry, unequal requirements, and operator authorization, the bank outlined its positions in a report published by UA News.

Operator Limits Could Leave Market Access to Regulator Discretion

Initially, the NBU advocated for allowing any trading-platform operator to enter the market provided they satisfied established requirements. It later agreed to a compromise restricting the initial phase to three legal entities selected via competitive bidding.

However, the final text omits any fixed cap on operators during the initial five-year period. Instead, that decision would rest with the National Securities and Stock Market Commission, designated in the legislation as the primary regulator of Ukraine’s crypto sector. The NBU warned that leaving this determination to the commission’s discretion could foster market concentration and corruption during the authorization process.

The Bill’s Next Stage Hinges on Whether Lawmakers Change the Safeguards

The NBU expects lawmakers to resolve its grievances prior to advancing the legislation, specifically by clarifying its oversight of foreign tokens and establishing definitive rules for operator access. Consequently, the framework faces demands for revision even after clearing a parliamentary committee for its second reading.

Ukraine’s prior virtual-assets legislation, which President Volodymyr Zelenskyy signed in March 2022, never went into effect because it relied on amendments to the tax code that were never enacted. Because of this precedent, the current bill’s journey toward an operational framework depends not only on legislative momentum but also on the specific details required to implement its rules.

The immediate challenge is whether lawmakers will alter the safeguards highlighted by the NBU. The central bank is not demanding the abandonment of crypto regulation altogether; rather, it asserts that the present draft fails to adequately safeguard economic security, financial stability, and monetary sovereignty.

FAQ

What crypto bill is the National Bank of Ukraine opposing?

The NBU opposes bill No. 10225-d, which would establish rules for virtual assets and crypto-market activity in Ukraine. The bank says its objection applies to the current version and has called for revisions.

What are the three main risks identified by the NBU?

The concerns are foreign tokens entering without adequate oversight, regulatory gaps that could let foreign assets bypass rules, and risks of market concentration or corruption in approving trading-platform operators.

How many crypto trading platforms could operate under the compromise proposal?

The NBU said it had accepted an initial limit of three legal entities chosen through competitive bidding. The final draft does not fix the number allowed during the first five years, leaving that choice to the securities commission.

What tax treatment does the updated bill propose for existing crypto assets?

The updated draft sets a transitional 5% tax rate for existing crypto assets through the end of 2028 and exempts crypto-to-crypto trades from tax. The initial draft proposed an 18% personal income tax on crypto gains plus a 5% military levy.

Why did Ukraine’s 2022 virtual-assets law never take effect?

President Volodymyr Zelenskyy signed the law in March 2022, but it depended on changes to the tax code that were not completed. The law therefore did not become operational.

Are there additional questions about the crypto bill?

For more details on the legislative process, stakeholders can follow updates from the National Bank of Ukraine and the Ukrainian parliament.

This article is for information only and is not financial advice.