Wednesday , 18 October 2017

The Central Bank of Ukraine is considering the possibility of regulating cryptocurrency

The National Bank of Ukraine, the country’s central bank, noted that in the near future it is considering the possibility of regulating the use of the cryptocurrencies.

Despite the fact that there is no clear initiative plan yet, in its last announcement, the central bank said the legal implications of cryptocurrencies will be discussed at the next Financial Stability Board of Ukraine meeting at the end of August.

The official comment of the Deputy Chairman of the National Bank of Ukraine Oleg Churiy on the status of Bitcoin in Ukraine:

“Now Bitcoin does not have a certain legal status in Ukraine. The definition of such a status in Ukraine is complicated by the lack of a consolidated approach to the classification of Bitcoin and regulation of transactions with it in the world.”

So, in a number of countries, operations with Bitcoin have been officially authorized. Usually they are treated as a commodity or an investment asset and are subject to the relevant legislation for tax purposes. In some countries Bitcoin is recognized as the settlement monetary unit.

For example, EU legislation today classifies Bitcoin as “a digital representation of value, not confirmed by a central bank or government agency and not tied to a legally established exchange rate that can be used as a means of exchange for the purchase of goods and services, their transfer and storage, and can be acquired in in electronic format “. In this case, the exchange of traditional currencies per Bitcoin unit is exempt from the payment of value added tax.

In Israel, Bitcoin does not fall under the legal definition of currency, either as a financial security or as a taxable asset. The People’s Bank of China considers Bitcoin to be a virtual commodity, not a currency, and its sale may be subject to VAT. In Japan, Bitcoin is recognized as an asset-like values ​​asset. Its sales are taxed by the Japanese analogue of VAT.
In Australia, Bitcoin is treated as property, and transactions with it are treated as barter. In Canada, Bitcoin is generally defined as an “intangible asset”, and transactions with it are also like barter.

Thus, in different countries Bitcoin is classified in different ways – as virtual currency, money surrogate, intangible value, virtual goods etc. For its part, the National Bank of Ukraine has not officially supported any of the above definitions.

The decision comes at a time when Ukraine is seeing increased bitcoin activity, from payments to mining to blockchain development, but also when regulatory uncertainty has led its law enforcement to take steps to reprimand bitcoin users.

Just days ago, Ukrainian police arrested several suspects who allegedly set up 200 computers to mine bitcoins at an abandoned swimming pool within a state institute in Kiev.

According to local media Kyiv Post, the court document accused the suspects of illegally taking advantage of state property, and producing a currency, which is currently a function only the National Bank is legally allowed to do. Further, the law also states that no other currency besides the Ukrainian Hryvnia can be treated as legal payment in Ukraine.

Citing the different approaches taken by other countries in defining cryptocurrencies, the banking authority will now begin its discussion with the Ministry of Finance, State Fiscal Service, the State Financial Monitoring Service, Securities and Stock Market State Commission and the National Commission for the State Regulation of Financial Services Markets.

 

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