Ukraine Will Not Regulate Crypto Mining

News, Regulation | June 26, 2018 By:

The State Service for Special Communication and Information Protection of Ukraine (Derzhspetszviazok) said that local crypto mining companies are not required to obtain a license.

Derzhspetszviazok is the technical security and intelligence service of Ukraine, under the control of the Ukrainian President. It is tasked to conduct policy in the protection of state information resources in data networks, provision of government communications, the national system of confidential communications, cryptographic and technical protection of state information.

In response to an inquiry filed by the Better Regulation Delivery Office Organization (BRDO), Derzhspetszviazok said that they have no intention to introduce licences for crypto mining as an economic activity. According to the BRDO, Ukrainian crypto mining companies generate more than $100 million of revenue annually. The country remains attractive to crypto miners because of relatively low mining costs.

Igor Samokhodski, an expert at BRDO, said that not recognizing crypto mining as an economic activity that needs licensing and as a service providing “cryptographic protection of information” is one of the main issues in the local crypto industry. He said mining still carries significant risk in Ukraine, as crypto companies face the possibility of major fines or having their equipment confiscated.

Samokhodski noted that crypto miners are trying to avoid official registration because of the uncertain legal status of cryptocurrencies and crypto transactions.

“The unpredictability of the actions of their counterparties and authorities creates a number of obstacles to their activities,” Samokhodski said.

Currently, there are three bills filed in the Ukrainian parliament targeting the cryptocurrency sector. The first is on the “Circulation of Cryptocurrency in Ukraine,” the second focuses on “Stimulating the Market of Cryptocurrencies and their Derivatives,” while the third one is a supplementary draft on taxation of crypto incomes and profits.

Last month, the Ukrainian National Securities and Stock Market Commission (SSMCS) announced that it would consider recognizing cryptocurrencies as a financial instrument. Timur Khromaev, head of the SSMCS, suggested that crypto assets and operations should be considered within existing legal frameworks on the basis of the principles behind the asset.