Ukraine’s central bank opposes crypto bill, citing monetary sovereignty concerns

The National Bank of Ukraine (NBU) has refused to support a new bill to legalise and regulate cryptocurrencies, warning that the proposed rules could endanger the country's financial system.

The National Bank of Ukraine (NBU) said that draft law No. 10225-d fails to address key concerns raised during talks with lawmakers, regulators and crypto industry representatives.

The bank said it supports crypto regulation based on the European Union's MiCA framework and International Monetary Fund recommendations, but argued that the current bill lacks key safeguards.

The bank said it received the final version of the bill late Tuesday, leaving little time to review changes before a parliamentary committee approved it for a second reading.

It said the drafting process was “not sufficiently transparent.”

“The development of this market should not create threats to monetary sovereignty, price and financial stability, and economic security of Ukraine," the NBU said.

One concern is that foreign-issued tokens could enter Ukraine even if they aren’t supervised in the countries in which they’re issued. Some of these assets could serve as electronic money, which the NBU said could threaten monetary sovereignty and financial stability..

The NBU wants the power to assess such tokens and restrict their use when needed, as it can for tokens issued in Ukraine. It also warned that foreign cryptocurrencies could let them bypass requirements that apply to similar Ukrainian assets.

Another concern is market access. The NBU said it has also agreed to a compromise that would initially limit the market to three crypto trading platform operators selected through a competitive process.

The final draft leaves the number of operators allowed during the first five years to the discretion of Ukraine's securities regulator, raising concerns about market concentration and corruption.

Under the bill, the NSSMC would be the main regulator of Ukraine's crypto market. The initial draft taxed crypto gains at the standard 18% personal income tax plus a 5% military levy. However, the updated bill introduces a lower 5% transitional tax rate for existing crypto assets until the end of 2028, while explicitly exempting crypto-to-crypto trades from being taxed.

Ukraine has tried to legalize crypto before. President Volodymyr Zelenskyy signed a virtual assets law in March 2022 after rejecting an earlier version, but it never took effect because it depended on changes to the tax code.

Lawmakers have also proposed letting the central bank hold crypto in its reserves, and authorities moved $8.3 million in seized crypto in June amid talk of a strategic reserve.

The NBU has called for further changes before lawmakers proceed, adding uncertainty to Ukraine's efforts to establish a legal framework for crypto trading and taxation.