Cryptocurrency has become a significant part of the world’s finances, which means that governments are paying close attention to it. That sort of attention often leads to new regulations, but that is not always the case. The Ukrainian government recently announced that it has no desire to regulate cryptocurrency mining. In fact, it intends to take action to support the growth of cryptocurrency.
Recognition of Self-Government
The Ukrainian government decided to refrain from regulating cryptocurrency mining because the field governs itself. The government recognized that both the cryptocurrency protocol and the members of the networks are sufficient to keep the system working. It believes that an external regulator is simply unnecessary in a system that runs on consensus.
Supporting the Market
While the government has decided not to regulate the mining process, it does have an interest in cryptocurrency in general. It hopes to support the development of and spread of technology that works with cryptocurrency, even if those tools work outside of national law. The Ukrainian government even plans to create regulatory sandboxes for the industry. It hopes to ensure that cryptocurrency can interact with traditional finance in a healthy and productive way, and plans to introduce policies to encourage it.
That is not to say that the Ukrainian government intends to give up all oversight of the industry. The country’s financial watchdog group does plan track all cryptocurrency transactions with a value of $1,200 or more. The government made that decision to help prevent money laundering and bring the country’s policies in line with the latest recommendations in the field.
Taxation is Likely
Ukraine also intends to levy taxes on cryptocurrency. A bill on cryptocurrency taxation was submitted to Ukraine’s parliament in November of 2019. Under that bill, investors would who sell their cryptocurrency for more than the price of purchase would pay taxes on the difference between the two prices. The taxes would eventually be set the country’s standard rate of taxation, but investors would benefit from a period of reduced taxation for a few years.
Cryptocurrency is a recent innovation. While many of the world’s governments are still deciding how to handle it, Ukraine has clearly chosen to support the new technology. Many of the details remain to be seen, but it is likely that the country will continue to support it in the future.