Ukraine’s securities regulator has unveiled a proposed tax framework for cryptocurrencies that could see certain crypto transactions taxed at a combined rate of 23%, while stablecoins and crypto-to-crypto exchanges may be exempt.
On April 8, the National Securities and Stock Market Commission (NSSMC) released the proposal to guide lawmakers in developing fair and effective crypto tax laws.
Up to 23% Tax on Cash-Outs, Not on Crypto Swaps
The proposed framework would impose an 18% income tax plus a 5% military levy on crypto income when digital assets are exchanged for fiat currency or used to buy goods and services. However, crypto-to-crypto trades would not be taxed, aligning Ukraine with countries like Austria, France, and Singapore.
NSSMC Chair Ruslan Magomedov emphasized that crypto taxation is no longer hypothetical.
“This issue is not a hypothesis, but a reality that is fast approaching,” he said, adding the goal is to help lawmakers make an “informed resolution” that considers both market impacts and tax implications.
Stablecoins May Be Tax-Exempt
The NSSMC also proposed exemptions for stablecoins backed by foreign currencies, citing Ukraine’s tax code, which already excludes income from foreign exchange transactions. In some cases, a lower tax rate of 5% or 9% might apply if an exemption isn’t granted.
How Mining, Staking, and Airdrops Could Be Taxed
The framework also covers other crypto-related activities, offering flexible options based on how users interact with their digital assets:
- Mining: Treated as a business activity but may be tax-free under a certain threshold.
- Staking: Could be taxed as “business captive income” or only upon conversion to fiat.
- Hard forks and airdrops: Taxed either at receipt or upon fiat conversion.
The NSSMC recommends a tax-free threshold to reduce the burden on small investors, which is standard practice in several jurisdictions.
Other Potential Exemptions
The regulator also proposed exemptions for:
- Crypto donations
- Transfers between family members
- Long-term holders who retain their crypto for a defined time period
However, non-custodial wallets might not qualify for these exemptions, according to the report.
This tax guidance arrives as Ukraine continues to develop its regulatory framework for digital assets. Parliament’s tax committee, led by Daniil Getmantsev, has said a draft crypto legalization bill is under review and was expected to be finalized in early 2025.
Ukrainian President Volodymyr Zelenskyy first signed legislation to regulate the crypto market back in March 2022.
