President Volodymyr Zelensky, rather than passing the nation’s first bill regulating digital assets, has sent it back to parliament for revisions.
As per the law, the management of the virtual asset market is carried out by various state entities depending on the form of such assets, specifically by establishing a new body with central executive power.
The creation of a new body, as stipulated by this law, will necessitate substantial expenditures from the government budget. As a result, Volodymyr Zelensky proposed that the National Commission on Securities and Stock Market regulate the circulation of virtual assets.
The current draft of the bill has The Ministry of Digital Transformation regulating cryptocurrencies, while the National Commission on Securities and Stock Market regulates digital assets backed by securities, and the National Bank of Ukraine is in charge of the central bank digital currency (CBDC) issue.
The president’s proposal leaves CBDC monitoring to the National Bank, and everything else, including the authorization of crypto brokers and other services, falls to the securities regulator.
In particular, the public reports of the International Organization of Securities Commissions (IOSCO) state that certain types of virtual assets contain, in their economic essence, features characteristic of financial instruments. Regulation of issuance of such types of virtual assets should be carried out by financial market regulators, as this function is specific to them.
According to the constitution, digital assets are non-material items with the monetary worth that are symbolized by “a set of data in electronic form.” There are 2 types of digital assets: those which are supported by other assets and those that are not. In Ukraine, digital assets can also be used to pay for products and services directly.
The proposed legislation specifies legal possession of a digital object as control over its keys unless they have been stolen or are being held by a custodian pursuant to an arrangement with the proprietor or a court ruling. The document also outlines the fundamental operating requirements for enterprises in Ukraine that deal with digital assets.
The initial version of the law was changed as it progressed through the legislative process in Ukraine’s parliament, Verkhovna Rada, to specify that no crypto corporation with benefactors or executives in the “aggressor state” could do business in Ukraine.
The writers’ use of the term “aggressor state” refers to Russia, according to the Ministry of Digital Transformation.