Will Ukraine Follow El Salvador’s Lead in Bitcoin? 2025 Crypto Legalization Explained

• Ukraine plans to legalize cryptocurrencies in 2025, with legislation developed in collaboration with the IMF and National Bank.
• Taxation on cryptocurrencies will mirror traditional financial assets, with taxes imposed when converting crypto into fiat currency.

Ukraine is set to legalize cryptocurrencies by 2025, according to Danylo Hetmantsev, head of the country’s Fiscal Committee. The announcement came during a recent investment forum and was reported by Ukrainska Pravda. 

Hetmantsev explained that a working group is currently finalizing a draft law that will be presented for its first reading in the coming months. This legislation, developed in collaboration with the National Bank of Ukraine and the International Monetary Fund ( IMF ), is expected to be ready after the New Year, with a goal to pass it within the first quarter of 2025.

The proposed law will bring cryptocurrencies under Ukraine’s regulatory framework, and Hetmantsev emphasized that, unlike some other jurisdictions, there will be no tax exemptions for digital assets. 

“If we talk about cryptocurrencies, there is a working group finalizing a draft law for its first reading. I believe the text, developed in collaboration with the National Bank and the International Monetary Fund (IMF), will be ready after the New Year. Our goal is to pass this law and legalize cryptocurrencies in the first quarter of 2025.” – Danylo Hetmantsev, head of the Fiscal Committee of the Parliament.

Taxation will align with traditional financial assets, meaning taxes will be levied when cryptocurrencies are converted into fiat currency.

Ukraine is also consulting with European experts and the IMF to ensure a cautious approach to cryptocurrencies, given their potential for facilitating tax evasion in traditional markets.

“In consultations with European experts and the IMF, we are taking a very cautious approach to using cryptocurrencies for tax exemptions, as it could potentially facilitate tax evasion in traditional markets,” Hetmantsev explained.

While the regulatory process in Ukraine has been slow, it has also resulted in a loss of potential tax revenue.

According to Bohdan Prilepa, CEO of Prof-it Blockchain, Ukraine is lagging behind the European Union, which already has a cryptocurrency regulatory framework in place with its MiCA (Markets in Crypto-Assets) law.

However, Ukraine may be able to learn valuable lessons from El Salvador, which has made significant strides in integrating Bitcoin into its economy.

The country has received global attention for adopting Bitcoin as legal tender, and prominent investors like Tim Draper have suggested that El Salvador could become one of the wealthiest nations. 

El Salvador’s use of geothermal energy for Bitcoin mining presents an example of how Ukraine could diversify its income sources.

Using renewable energy for mining could help stabilize Ukraine’s economy while reducing reliance on traditional energy sectors.

In contrast, Russia’s regulatory stance has been more restrictive, particularly in mining. The Russian government has suspended Bitcoin mining in several regions, including areas occupied in Ukraine, to secure energy supplies during the winter.