President Volodymyr Zelenskyy has allegedly blocked the review of a draft law on crypto assets in the Ukrainian legislature, postponing its adoption.
The new legislation was supposed to regulate the country’s tax regime for cryptocurrency operations, and critics say its delay goes against the interests of both the state and the industry.
Ukrainian Rada suspends crypto law review
Ukraine’s head of state has reportedly blocked the consideration of a new bill designed to update crypto regulations in the Eastern European nation, including the taxation of profits and the size of a surcharge collected to fund defense efforts amid the ongoing war with Russia.
According to Ukrainian lawmaker Yaroslav Zheleznyak, the Office of President Zelenskyy has withdrawn the document for an indefinite period of time, the leading Russian-language crypto news outlet Forklog unveiled in an article.
“For those who are following the bill on the legalization of crypto in Ukraine, I have bad news for you – it will not be in the near future. Due to the OP, the consideration was blocked,” Zheleznyak announced in a Telegram post on Monday.
The draft law has disappeared from the legislative agenda of the Verkhovna Rada, the Ukrainian parliament, after a meeting at the President’s Office. “It was personally removed by the president,” Zheleznyak emphasized, citing knowledgeable sources.
The Ukrainian deputy detailed his allegations in a YouTube video, pulling the curtain on the motives behind the decision to halt the consideration of the law.
Zelenskyy allegedly influenced by securities commission chief
Zheleznyak is convinced that Volodymyr Zelenskyy has been influenced by the Chairman of Ukraine’s National Securities and Stock Market Commission (NSSMC), Ruslan Magomedov, through the head of the Office of the President, Andriy Yermak.
The Rada member claims that Magomedov’s remarks on the bill were so significant that he demanded its withdrawal and that his Commission was the only involved government agency to request that.
The Ministry of Finance, the State Financial Monitoring Service of Ukraine (SFMS) and the National Bank of Ukraine (NBU) all had their comments, but they were ready to submit them ahead of the second reading of the draft, without blocking the legislative process.
Magomedov insisted that the proposed legislation is inconsistent with the EU’s new Markets in Crypto Assets (MiCA) regulation, as it does not charge the capital market regulator with defining tokenized securities, which violates the integrity of regulations and would hinder European integration.
The head of the NSSMC also highlighted that the legal act has not been approved yet by Ukraine’s Financial Stability Council and foreign partners.
The bill also contains provisions suggesting to automatically admit service providers that are not authorized in Ukraine to its market. Magomedov fears this would create a loophole that can be exploited by Russian financial institutions registered in third countries.
Furthermore, the Securities Commission chief demanded that the bill be evaluated by Ukrainian law enforcement agencies, and in particular by the Security Service of Ukraine (SBU), in the light of implementing sanctions policies.
Yaroslav Zheleznyak thinks Magomedov’s arguments are manipulative and warns that the lack of cryptocurrency regulation is harmful for both the Ukrainian state, which is not collecting taxes, and the country’s Web3 sector, whose development is being hindered. The lawmaker vowed to “fight for the bill” and for reforming the securities regulator.
The Verkhovna Rada’s tax committee approved the draft law “On Virtual Assets” at the end of April and recommended it for review on first reading. Earlier last month, the NSSMC published a framework for crypto taxation, proposing an 18% income tax on crypto earnings and bumping a military surcharge to 5% from the current 1.5%.
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