On September 4, 2025, Ukraine’s parliament, the Verkhovna Rada, passed the first reading of a bill to legalize and tax cryptocurrencies with 246 votes in favor.
The bill proposes an 18% income tax and a 5% military levy on crypto profits, totaling a 23% tax rate, alongside a temporary 5% tax on fiat conversions for the first year to encourage compliance. This move aims to regulate Ukraine’s growing crypto sector, which ranks eighth globally in adoption, and address $10 billion in losses from illicit flows due to inadequate regulation.
The legislation aligns with EU accession requirements and could boost state revenue for defense and reconstruction amid the ongoing war. Further amendments are expected before the second reading, and the regulatory authority remains undecided between the National Bank of Ukraine and the National Securities and Stock Market Commission.
The passage of the first reading of Ukraine’s bill to legalize and tax cryptocurrencies has several implications: Taxing crypto profits at 23% (18% income tax + 5% military levy) could generate significant revenue for Ukraine, supporting defense and reconstruction efforts amid the ongoing war. The temporary 5% tax on fiat conversions incentivizes compliance, potentially increasing state funds.
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Legalizing crypto aligns Ukraine with EU standards, a key step for EU accession. Clear regulations could reduce the $10 billion in losses from illicit crypto flows, fostering a more transparent market. Formal recognition of crypto may attract more investment and innovation in Ukraine’s already vibrant crypto sector. This could strengthen its position as a crypto hub.
A regulated framework may boost confidence among domestic and international crypto investors, encouraging broader adoption and reducing risks associated with unregulated markets. The undecided regulatory authority could delay implementation.
Potential amendments before the second reading may also alter the tax structure or enforcement, impacting compliance. The military levy ties crypto revenue directly to war efforts, potentially increasing public support for the bill but also placing a financial burden on crypto users.
The bill aligns Ukraine’s crypto regulations with the EU’s Markets in Crypto-Assets (MiCA) framework, which emphasizes transparency, consumer protection, and anti-money laundering (AML) measures. This demonstrates Ukraine’s commitment to adopting EU financial regulations, a key requirement for accession.
By addressing the $10 billion in losses from illicit crypto flows through regulation and taxation (18% income tax + 5% military levy), Ukraine shows progress in combating financial crime, a priority for the EU. This could enhance its credibility in accession negotiations.
Legalizing and taxing crypto could boost state revenue, supporting Ukraine’s fiscal stability—a critical factor for EU membership. The funds, partly allocated to defense and reconstruction, signal economic resilience, aligning with EU expectations for candidate countries.
A regulated crypto market could facilitate Ukraine’s integration into the EU’s digital economy, encouraging cross-border investment and innovation. This aligns with the EU’s goal of a unified digital market. The undecided regulatory authority and potential amendments before the second reading could delay full compliance with EU standards.
Inconsistent or weak enforcement might raise concerns during accession talks. Advancing crypto legislation amid war underscores Ukraine’s reform commitment, potentially garnering EU political support. However, the EU may scrutinize implementation to ensure alignment with MiCA’s rigorous standards.
In summary, the bill strengthens Ukraine’s EU accession case by aligning with financial and digital market standards, but successful implementation and regulatory clarity are critical to maximizing its impact.