The Verkhovna Rada supported the legalization of cryptocurrencies: the first year of 5% tax, then — 23%

As well as expectedThe Verkhovna Rada has taken the first step towards legalizing cryptocurrencies in Ukraine — MPs voted in favor of the relevant draft law No. 10225-d in the first reading. This document is needed to put things in order in the field of virtual assets and enable the digital economy to develop transparently and legally. About said Danylo Hetmantsev, Chairman of the Parliamentary Committee on Finance, Taxation and Customs Policy.

In fact, the MPs propose to adopt a new version of the Law «On Virtual Assets», as well as amendments to the Tax Code, the Civil Procedure Code, the Commercial Procedure Code, the Code of Administrative Procedure, and a number of laws.

If everything goes according to plan, the Law on Cryptocurrency Legalization in Ukraine will come into force on January 1, 2026. It is also necessary for the Cabinet of Ministers to decide within a month on the body that will act as a regulator of the crypto asset market. Currently, three government agencies are applying for this role: The National Securities and Stock Market Commission, the National Bank, and the Ministry of Digital Transformation.

The draft law divides all crypto assets into three types. The first is those that are “tied” to specific real assets, such as stocks. The second is those that are pegged to a specific currency, such as USDT. And the third type is all other cryptocurrencies.

Taxation of cryptocurrency transactions

The law proposes new rules for cryptocurrency taxation starting from January 1, 2026. The following tax innovations are expected for individuals:

• a separate taxation regime for transactions with virtual assets (VA) will appear. They will be separated from other income and investments;
• the tax will be calculated on the net profit for the year: the cost of purchasing assets will be deducted from the income;
• tax rates are proposed to be set at 23% (18% personal income tax + 5% military duty);
• the expenses that can be taken into account are limited to avoid fraud. But the Ministry of Finance, in consultation with the regulator, will be able to expand this list;
• losses from previous years can be carried forward until they are “closed” by profits. There are exceptions, for example, if a crypto asset has been canceled;
• There will be no tax agent (i.e., an intermediary that automatically withholds tax). Everyone will declare and pay taxes themselves.

There is another important point for those who have already bought cryptocurrency before the law was passed. If a person sells it in 2026, he or she will be able to pay the tax at a reduced rate of —5% instead of the usual rate.

Some cryptocurrency transactions are proposed to be exempt from taxation. These include the exchange of one cryptocurrency for another and the sale of crypto if the transaction amount does not exceed the minimum wage. Another exception is newly created virtual assets (e.g., when they are mined) or those that the user received for free from the issuer or offerer. This also applies to cases where crypto is given in exchange for the user’s personal data.

Changes for business

The bill also applies to service providers. Companies and services that work with cryptocurrencies must take steps to authorize or register with the regulator within 60 days after the start of their activities. They must also submit annual reports. Violations are subject to fines. In the first years, they will be smaller, and then — full.

In addition, the document regulates the taxation of service providers — tax liabilities for transactions with virtual assets, including taxation of profits from their sale. It also defines mechanisms for regulating advertising and preventing fraud.

Crypto service providers are prohibited from operating under the simplified taxation system.

Potential problems

Despite the positive aspects of legalizing the cryptocurrency market in Ukraine, the draft law contains many controversial points. Some of its provisions cause controversy and concern among experts:

• The law contains many unclear definitions. For example, it is not clear who will decide what exactly is considered the “essence” of a virtual asset.
• They want to give the regulator extensive powers: access to company premises, seizure of documents, inspections, even the right to conduct “control purchases.” Experts say that this looks like police powers and could violate people’s rights.
• It is proposed that court cases concerning the seizure of property or access to information be considered within 96 hours. Experts believe that this is too fast, and there is a risk of a formal review without taking into account all the details.
• There are privacy issues — for example, whether the regulator will not be able to obtain private data on communications between people, including lawyers’ communications.

Overall, the Draft Law creates a framework for a legal cryptocurrency market, introduces taxes and rules for services. However, it has many controversial points: from overly broad powers of the regulator to the risk of double liability. Experts say that if not finalized, the law may create more problems than it solves. By opinion MP Yaroslav Zheleznyak, the document will be amended by the second reading.

Source: Judicial and legal newspaper