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Ukraine to Regulate Bitcoin Businesses Under Existing Laws
Despite Russia's ban, the National Bank of Ukraine has decided to follow a more European path for regulating bitcoin.
By Pete Rizzo
Updated Sep 14, 2021, 2:09 p.m. Published Feb 17, 2014, 8:12 p.m.
In response to queries from Ukraine-based news source AIN.UA, the National Bank of Ukraine (NBU) has issued its first formal legal guidance to its native bitcoin community.
Most notably, the NBU has indicated that bitcoin payment systems and payment infrastructure services must register with the agency and abide by existing laws related to the management of electronic money.
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The announcement positions Ukraine closer to the European Union than Russia on matters of virtual currency regulation, even as Russia has moved to solidify its influence over the former USSR member state on the national stage.
Russia abruptly banned bitcoin earlier this year, in what has been one of the more hostile reactions to the emerging technology.
Indeed, Russia's reaction was a topic of conversation in message board posts related to the newspaper's announcement, suggesting fears Ukraine could adopt a similar stance were prevalent prior to the news.
Existing laws
The topic of whether bitcoin businesses necessitate unique laws is being debated around the world, and as such, Ukraine's decision to use existing laws gives it a unique position on the global stage.
AIN.UA published the full comments it obtained from the NBU, which amount to a few paragraphs of direction, as well as a link to an existing payment systems and money laundering law - "On Payment Systems and Funds Transfer in Ukraine" - which lies at the center of the new guidance.
Pursuant to Article 9 of the law, the NBU stated that bitcoin businesses have the right to perform services only after registering with the government, suggesting that those that have not are in violation of current law.
also requires payment service providers to:
- Enact a procedure for settling instances when it fails to perform services
- Establish an organizational structure and formal channels to resolve member disputes
- Provide information about the transfer of money to enhance consumer protection.
Further, the NBU cited Article 15 of the Act, which requires those with "the intention to issue electronic money" to coordinate rules for its use consistent with current regulation.
Impact
Roman Skaskiw, an American bitcoin enthusiast living in Ukraine, suggested that the new guidance may limit growth and innovation in the European nation.
Said Skaskiw:
"I think it's ridiculous. Because property rights are so weak in Ukraine, software has been one of the few opportunities Ukrainians have been able to realize."
Skaskiw described Ukraine as having "world-class programmers", but said that there is "very little in the way of a community" around bitcoin. To further encourage this growth, Skaskiw suggests that Ukraine should strive to create a permissive environment for virtual currency.
The news also comes amid statements from bitcoin thought leaders that suggest Ukraine could be a key market for bitcoin.
States (like UK, US, Ukraine, Turkey, Greece, Thailand, etc.) are flammable. Bitcoin is not. Your fiat is flammable. BTC is not.
— Max Keiser (@maxkeiser) January 25, 2014
The latest warning
While NBU officials did provide some legal clarifications for the wider virtual currency community, they also followed in the footsteps of other European nations that have issued warnings to citizens regarding bitcoin's price volatility and lack of consumer protections.
Said the bank:
"We emphasize that all the risks associated with the use of so-called ... cryptocurrency ... bear calculations."
With the statement, Ukraine joins Cyprus, Estonia, Greece and Kazakhstan among the European and Asian nations that have recently decided to increase consumer awareness of the risks of virtual currencies.
Image credit: Dmitry Pashuk / Shutterstock.com
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