A new cryptocurrency bill provides for preferential tax treatment and banking oversight of transactions

How Much Tax Will Ukrainians Pay on Cryptocurrency Income?

The Verkhovna Rada has finally moved forward on the taxation and effective legalisation of Ukraine’s crypto market.

At first reading, Parliament adopted as a basis Draft Law No. 10225, introducing amendments to the Tax Code of Ukraine and other legislative acts regulating the circulation of virtual assets. The key principles proposed for bringing virtual assets and tokens into the legal framework are now becoming clearer and are already being analysed by experts.

Not Only Cryptocurrency: What the Draft Law Covers

Although the draft law is commonly referred to as the “cryptocurrency law,” it uses the broader concept of virtual assets (VA).

Under the proposed framework, virtual assets are divided into three categories:

• asset-referenced tokens;
• electronic money tokens;
• other tokens that do not fall within the first two categories, with their specific types to be determined later by the market regulator.

A 5% Transitional Rate and Regulation of NFTs

For private investors, the draft provides for a reduced personal income tax rate during the initial transitional period.

The standard personal income tax rate in Ukraine is 18%, but for income from virtual assets it is proposed to apply a reduced 5% rate in 2026. The 5% military levy would continue to apply, resulting in an overall tax burden of 10%.

From 2027, unless the rules are amended, taxation would return to the standard level of 18% personal income tax plus a 5% military levy, or 23% in total.

Financial analyst Andrii Shevchyshyn believes that even a 10% initial rate may discourage participants from legalising previously undeclared crypto assets and argues that a zero-declaration mechanism could have been a more effective starting point.

At the same time, the responsibility for declaring and paying taxes would rest entirely with the individual investor.

Cryptocurrency exchanges would not act as tax agents and would therefore not calculate, withhold, or remit taxes on behalf of users.

As Oleksandr Romasev, Managing Partner at ETERNIX Law Firm, explained to Telegraf:

“The obligation to pay taxes rests with the user. The exchange is not a tax agent and therefore does not withhold or pay taxes on behalf of users. Accordingly, users must independently determine their tax reporting and payment obligations. Importantly, only profit is taxed, meaning that losses from cryptocurrency transactions would not give rise to tax liability. This could provide an additional incentive for market participants to move out of the shadow economy.”

Taxes would therefore apply to net profit, allowing documented acquisition costs to be deducted from total proceeds.

Losses from previous periods could also be carried forward until fully offset, meaning tax would only become payable once the investor reaches an overall positive financial result.

The simplified taxation regime would not be available for virtual asset activities. This restriction would apply both to professional market participants — such as exchanges and crypto exchange services — and to individual entrepreneurs (FOPs) conducting systematic virtual asset trading activities.

The draft also provides for several exemptions:

• income from the sale of virtual assets up to the amount of one minimum monthly wage would not be taxed;
• exchanges of one virtual asset for another would generally not trigger taxation where no conversion into fiat currency occurs, subject to specific rules for NFTs;
• mining of virtual assets would not itself be treated as a taxable event.

Questions remain regarding taxation of legal entities. No specific preferential regime is currently proposed for companies, meaning income from virtual asset transactions would generally be taxed under the standard corporate income tax rules.

Experts also point out that accounting rules for recognising virtual assets on corporate balance sheets remain insufficiently developed and will require further regulation.

Exchanges and Crypto Service Providers: Registration and Liability

Under Draft Law No. 10225, all virtual asset service providers operating in Ukraine — including exchanges, exchange services, and other professional market participants — would be required to register with the regulator.

They would then become subject to reporting requirements and regulatory inspections similar to those currently applicable to banks and non-bank financial institutions.

The draft also introduces the concept of a mandatory white paper for public offerings of virtual assets.

According to Oleksandr Romasev, the white paper would serve as a user-oriented disclosure document containing key information on the virtual asset, its characteristics, and the risks associated with acquiring it.

This would provide investors with guaranteed access to important information before making investment decisions.

The draft also introduces specific requirements for advertising virtual assets, aimed at reducing the risk of misleading potential investors. However, the ultimate investment risk would continue to remain with the user.

Disclosure and Financial Monitoring

The proposed regulatory framework introduces extensive disclosure requirements not only for professional market participants but also for investors.

Transfers involving virtual assets would become subject to financial monitoring requirements broadly comparable to those applied in the banking sector.

Relevant information may include:

• full name;
• place of residence or actual location;
• date and place of birth or passport details;
• distributed ledger address of the sender;
• virtual asset account number.

This information would be held by the relevant service provider and could be disclosed to competent authorities in circumstances provided for by law.

The increased transparency of crypto wallet ownership is largely linked to international anti-money laundering standards and Ukraine’s integration into global and European regulatory frameworks.

Who Will Regulate Ukraine’s Crypto Market?

Another key issue is the identity of the future regulator.

Previously, several institutions had been discussed as potential regulators, including the National Bank of Ukraine (NBU), the National Securities and Stock Market Commission, and the Ministry of Digital Transformation.

Under the current version of Draft Law No. 10225, the National Bank is expressly assigned regulatory and supervisory powers within the virtual asset market to the extent provided by the future Law on Virtual Asset Markets.

However, experts note that discussions are ongoing and that the final regulatory model may still change.

According to Oleksandr Romasev, the NBU may ultimately remain either the sole regulator or one of two regulators, with another authority potentially appointed by the Cabinet of Ministers in coordination with the National Bank.

The draft also expressly provides a legal framework for banks and non-bank financial institutions to provide services related to virtual assets, subject to authorisation.

The exchange of virtual assets for foreign currency would also formally be recognised as a foreign exchange transaction, with detailed rules to be established by the NBU.

Virtual Assets May Be Seized and Enforced Against

The proposed legislation also expressly provides that virtual assets may be subject to seizure and enforcement through court proceedings.

Relevant amendments would recognise virtual assets as movable property alongside money, foreign currency assets, and securities.

The draft also provides for the declaration of virtual assets held by public officials and members of their families.

Declarations would need to include information such as the type of asset, its name, quantity, acquisition value in hryvnia, and the relevant distributed ledger or account identifier.

Will the Crypto Market Really Be Legalised?

Despite the broad scope of the draft law, experts emphasise that many practical issues remain unresolved.

Among them are the documentary requirements for confirming the purchase, exchange, free receipt, or issuance of a virtual asset, as well as the treatment of blockchain network fees when calculating taxable income.

These issues are crucial because they directly affect the calculation of acquisition costs and taxable profit.

Oleksandr Romasev notes that Draft Law No. 10225 addresses many of the key elements required for market regulation, but significant work remains before the second reading.

Proposals and comments from the State Tax Service, Ministry of Justice, Ministry of Economy, Ministry of Finance, and other public authorities will need to be reconciled.

Even after adoption, the new framework will not become fully operational immediately, as a substantial number of implementing regulations will still need to be developed.

Ukraine is expected to rely heavily on European experience, particularly the EU Markets in Crypto-Assets Regulation (MiCA).

MiCA establishes a comprehensive regulatory framework for the issuance of crypto-assets and the provision of related services within the European Union, setting licensing, disclosure, consumer protection, and compliance requirements for crypto-asset service providers.

According to Oleksandr Romasev, Ukraine is among the countries with rapidly growing participation in the virtual asset market but still lacks clear and consistent rules protecting all market participants.

This legal uncertainty has negatively affected both individual investors and larger market players and has also prevented the state from fully integrating the sector into the formal economy and tax system.

The adoption of a comprehensive regulatory framework could therefore become an important step toward the legalisation, transparency, and long-term development of Ukraine’s virtual asset market.