On April 10, 2025, Ukraine's leading financial regulatory agency – the National Securities and Stock Market Commission (NSSMC) – proposed a new tax policy imposing a personal income tax rate of up to 23% on certain cryptocurrency transactions. With the aim of preventing financial abuse and attracting investment, will this move change the “playing field” for crypto in Ukraine? Let’s analyze in detail.
New Tax Proposal: 18% Income Tax + 5% War Levy
According to an announcement on April 8, 2025, the NSSMC, under the leadership of Mr. Ruslan Magomedov, has unveiled a new tax matrix to regulate the taxation of cryptocurrencies in #ukraine . According to the proposal, certain crypto transactions – specifically when users withdraw non-stablecoin cryptocurrencies to fiat currency or exchange them for goods/services without recognizing a financial loss – will be subject to a standard personal income tax rate of 18%, plus a 5% wartime levy applicable from December 2024. In total, the tax could reach up to 23%.
The goal of this policy, according to Mr. Magomedov, is to “prevent financial abuse and promote the lawful and responsible use of digital assets.” He also emphasized that establishing “fair and understandable” tax regulations is a prerequisite for attracting investment and integrating Ukraine's digital asset market into the global financial system.
Tax Exemption for Crypto-to-Crypto Transactions and Incentives for Stablecoins
A highlight of the proposal is that crypto-to-crypto transactions (exchanges between cryptocurrencies) will not be taxed, aligning with the approach of many European countries such as Austria, France, and crypto-friendly regions like Singapore. This helps reduce the tax burden on traders who frequently swap tokens, a common activity in the crypto market.
Additionally, #NSSMC proposes tax incentives for stablecoins backed by foreign assets and some asset reference tokens (ARTs). According to Ukraine's tax law, income from foreign exchange transactions is tax-exempt, therefore this agency believes there is “reason to consider a preferential tax rate or tax exemption” for these stablecoins. The proposed preferential tax rate could be 5% or 9%, significantly lower than the 23% applicable to other transactions.
Other Types of Transactions: Diverse Taxation Methods
The proposal also presents tax options for various types of crypto transactions:
Mining: Can be seen as a “business activity” and taxed accordingly.
Staking: Can be considered “passive income from business” or only taxed when withdrawing (cash-out).
Hard-forks and airdrops: May be taxed as regular income or only when withdrawing.
The flexibility in this approach shows that the NSSMC is trying to create a comprehensive legal framework that suits the specifics of the crypto market while avoiding overwhelming investors with overly rigid regulations.
Context: Ukraine and the Journey to Legalize Crypto
Ukraine legalized the cryptocurrency sector in 2022 under the direction of President Volodymyr Zelensky, identifying regulatory bodies and allowing them to create specific regulations. Currently, the National Bank of Ukraine is drafting a bill based on the EU's Markets in Crypto Assets regulation (#MiCA ), a comprehensive legal framework for digital assets, effective from 2024. This is not surprising, as Ukraine has been an EU candidate since 2022 and is striving to harmonize its financial policies with European standards.
Previously, in 2023, Ukraine proposed an amendment to the tax code to include cryptocurrency, but it was not passed. According to a 2024 analysis from Swiss blockchain company Global Ledger, Ukraine could collect over 200 million USD in annual tax from crypto transactions if an effective tax policy is implemented.
Impact on the Crypto Market in Ukraine
Attracting Investment: The 23% tax rate could pressure individual investors, but the exemption of crypto-to-crypto transactions and incentives for stablecoins indicates that Ukraine is trying to create a crypto-friendly environment, attracting foreign capital.
Increasing Transparency: A clear tax policy will help minimize financial abuse activities, such as money laundering through crypto – an issue that Ukraine has faced (Chainalysis 2023 noted that Ukraine ranks among the top 10 countries for illegal crypto activities).
Pressure on Small Investors: The 23% tax rate is quite high compared to countries like Singapore (0% for crypto-to-crypto transactions) or Portugal (tax exemption for individual investors until 2023). This may cause small investors in Ukraine to shift to regions with lighter tax policies.
Reactions from the Crypto Community
Based on posts on X, the crypto community in Ukraine and internationally has had mixed reactions. Some users claim that the 23% tax rate is “too heavy” and could “squeeze” the crypto market in Ukraine, while others appreciate the tax exemption for crypto-to-crypto transactions and incentives for stablecoins, viewing this as a “balanced” move to both collect taxes and encourage investment. However, information from X only reflects community opinions and is not verified evidence of actual impacts.
Conclusion: Ukraine – A Crypto Destination or a New “Tax Mine”?
The NSSMC's proposed 23% tax is an important step in legalizing and regulating the crypto market in Ukraine. With an 18% personal income tax plus a 5% wartime levy, this policy may pressure investors, but incentives such as tax exemptions for crypto-to-crypto transactions and reduced taxes for stablecoins show that Ukraine still wants to maintain its appeal to the crypto sector. In the context of this country moving towards EU standards and needing financial resources for the war, the new tax policy could be a “double-edged sword.” Can Ukraine become an ideal destination for crypto or just a new “tax mine”? The answer will depend on how the government adjusts its policy in the near future.
Risk warning: Crypto investment carries high risks due to price volatility and legal uncertainties. Please consider carefully before participating. #anhbacong