The government of Ukraine is forming a working group which will be tasked with developing proposals for cryptocurrency regulation. As per a statement issued by the government, the formation of the working group was proposed at a meeting of the National Cybersecurity Coordination Center. 

Meeting attendees noted that there were multiple problems associated with the unregulated circulation of digital currencies in Ukraine. The decentralized nature of cryptocurrencies, coupled with their anonymity and the lack of both external and internal regulation, meant that they could be used in potentially illicit activities, such as the purchase of drugs and weapons, and terrorism financing (especially in occupied territories).

Oleksandr Turchynov, Secretary of the National Security and Defense Council of Ukraine, noted that the lack of legislation and regulation pertaining to cryptocurrencies “poses a threat to the economy and security of the state”.

“Given the rapid development of cryptocurrencies in the world, this issue cannot be left out of the state’s attention,” Turchynov added.

A working group will be formed to tackle these issues, and will comprise officials from the National Bank of Ukraine, the Ministry of Finance, the SSU, the National Securities and Stock Market Commission, the National Police, the State Financial Monitoring Service, the State Fiscal Service, and the State Service for Special Communications and Information Protection.

This working group will be responsible for identifying a state regulator for the domestic cryptocurrency market, proposing a system for monitoring transactions, and establishing a system for the taxation of cryptocurrencies as per Ukrainian law. In addition, the working group will also be required to:

“… develop a mechanism for ensuring access of law enforcement bodies to the data of cryptocurrency exchanges with the obligation of the given subjects to store information about all transactions within the period established by law for financial institutions and disclosure of customer information on a motivated request.”

Notably, the statement also confirmed that the National Bank of Ukraine is looking into creating its own digital currency – a move that is also being considered by central banks in Russia, Israel, and Singapore, to name a few.

The more long-term goals of the working group are to work toward greater cooperation between relevant authorities at an international level, to ensure complete regulation of cryptocurrencies and prevent their usage in criminal activities.