Ukraine is making efforts to legalize encryption, and lawmakers are expected to vote for the long-awaited bill in the coming months, local media reported on February 28th.
However, uncertainty remains about how digital assets are taxed. This is an important issue that could affect the country’s growing crypto sector. Ukraine is investigating crypto tax rates from 5% to 10% as part of a broader effort to regulate digital asset markets while generating revenue from state budgets and military funds.
However, the authorities are considering applying a standard tax framework that imposes an income tax of 18% and a military collection of 5%, increasing the total tax burden on crypto revenues to 23%.
The final decision is under discussion as lawmakers work to pass a comprehensive regulatory framework, and the law is expected to be finalized by mid-2025.
Danil Hetmantsev, head of Verkhovna Rada’s Finance, Tax and Customs Committee, said he expects a first reading of the law until the end of March and a second reading soon. If the bill moves forward as planned, it could be enacted by mid-2025. However, some officials remain skeptical of the timeline.
Balance between regulation and growth
Taras Kozak, a member of the Kyiv city council and chairman of the investment group Univer, suggested that the process could take time.
Kozak said in an interview:
“We are optimistic that the bill will pass by the end of the year, but there is a possibility that full legalization and taxation will be implemented in 2026.”
Ukraine has emerged as a leader in crypto adoption, and digital assets have played a key role in financial transactions and donations since the 2022 Russian invasion. The country embraces blockchain technology to support the economy, but legal uncertainty is hampering mainstream integration.
The pending law aims to establish clear guidelines for cryptocurrency use and taxation. The exact tax structure has not yet been determined, but the authorities suggest a fixed tax or a tiered system based on transaction volume.
Kozak said “Ukraine needs a competitive regulatory framework,” warning that excessively complicated taxation could push businesses and investors onto offshore platforms.
Legislative delay
Despite strong political support, this process faces delays. In 2021, Ukraine passed a law that allowed cryptocurrency, but additional amendments were required to be made to meet EU standards.
The current bill seeks to address these gaps, ensuring compliance with global money laundering (AML) and counterterrorism financing regulations.
Hetmantsev highlighted the urgency to pass legislation, arguing that delays could hinder Ukraine’s ability to attract foreign investment in blockchain-based industries.
He said:
“We’re doing everything we can to accelerate the process.”
If laws are in place, Ukraine will join the growing list of countries that formally integrate digital assets into financial and tax systems.
However, industry leaders emphasize that tax policies play an important role in determining whether markets will thrive or struggle under regulatory pressure.
