Ukraine Regulator Backs Cryptocurrencies as Financial Instruments

The head of financial watchdog says crypto has passed "point of no return" in economic life

by Marin Marinov
10 May • 3 min
In Regulation

In a Facebook post, the Chairman of the National Securities and Stock Market Commission of Ukraine (NSSMC), Timur Khromayev has spoken in favor of recognizing cryptocurrencies as financial instruments. NSSMC`s head plans to put forward the idea at the Financial Stability Council (FSC) meeting next month.

“We passed the “point of no return” and the crypto industry becomes an integral part of economic and financial relations. Therefore, status, activities and consequences of virtual currencies are main issues for the financial regulators,” Khromayev wrote.

Need of regulation

The Head of NSSMC thinks that FSC should also examine all activities that are tied to digital coins.

“It is necessary to consider crypto assets and related activities within the existing “old” rules based on principles and content, rather than forms (paper, digital, etc.) and formulate new rules that should measures up the dynamic development of this industry,” Khromayev explained in his Facebook post.

The most popular economic projects related to the cryptocurrencies are Initial Coin Offerings (ICOs)crypto exchanges and crypto funds.

one man and a lot of screens around him

Last year, NSSMC recommended cryptocurrencies to be defined as financial instruments, investment asset or commodity but not as a currency, the used definition in a new regulatory draft reads:

“In its core, the concept of “cryptocurrency” is the result of financial engineering and [it is] not “currency”. Therefore, it is more appropriate [lawmakers] to use the term “crypto unit."

NSSMC insisted that under Ukrainian financial laws, cryptocurrencies “cannot be recognized as money, currency, foreign payment instruments, electronic money, securities or money surrogate.”

Two draft laws were introduced in Ukraine’s parliament - one aims to regulate the circulation of cryptocurrency, while the other creates framework for stimulating the market of digital coins and their derivatives. Both are put on hold as well as a proposed amendment to the Tax Code that should regulate crypto incomes.

National or international measures?

In his Facebook post, Timur Khromayev pointed out that implementing laws and regulations is in national hands because the international financial community is far from developing global standards.

Earlier the country's Economy Minister urged state institutions to take necessary steps to include coin mining as official economic activities. Many of the former Soviet republics are turning their attention to the mining process as we reported.

On a global scale, G20 countries agreed to “monitor” crypto-assets but stopped short of any specific actions after the Buenos Aires Summit of finance ministers and central bank governors. The summit called for global implementation of anti-money laundering (AML) and counter-terrorist financing (CTF) standards regarding crypto-related activities.