Main Points :
- Ukraine’s parliament passed the first reading of a law legalizing crypto and imposing taxation: 18% income tax plus 5% military tax on digital asset profits.
- For the first year, converting cryptocurrencies into fiat currency will attract a reduced tax rate of 5%.
- Exemptions apply to crypto‑to‑crypto exchanges and stablecoin transactions—aligning with the April 2025 financial regulator’s recommendation.
- Regulatory oversight remains undecided; the National Bank of Ukraine (NBU) is likely to play a role alongside a still‑to‑be‑chosen secondary regulator.
- The move could reclaim up to $10 billion in economic activity, attracting investment and formalizing Ukraine’s vibrant crypto sector.
- Ukraine now ranks 8th globally in crypto adoption, particularly strong in retail, institutional, and DeFi activity.
Background and Legislative Progress
Ukraine made a landmark move on September 3, 2025, when its parliament, the Verkhovna Rada, passed the first reading of a draft law (No. 10225-d) that legalizes and brings cryptocurrencies under a formal tax and regulatory framework. Legislator Yaroslav Zhelezniak announced that 246 members voted in favor—highlighting a strong push to integrate Ukraine’s digital asset economy into the official legal system.
The bill classifies virtual assets as a form of movable property—not legal tender—but provides a clear definition rooted in blockchain technology. It also tackles previously neglected areas like crypto mining and transactions involving NFTs or tokens with embedded rights.
Taxation Details: Capturing Value, Fueling Defense
Under the proposed law:
- Digital asset profits: taxed at 18% income tax plus a 5% military tax.
- During the first year post-enactment, conversions from crypto to fiat enjoy a preferential tax rate of 5%.
- Crypto-to-crypto exchanges and stablecoin transactions are exempt, following the April 2025 recommendation of Ukraine’s financial regulator, which envisioned an effective flat tax up to 23% under conventional regimes.
These provisions aim to balance fiscal needs—especially in wartime—with incentives to formalize digital asset activities.
Regulatory Framework and Oversight Uncertainties
While tax rules are well-defined, regulatory oversight remains under negotiation. The draft doesn’t yet name a chief regulator; the National Bank of Ukraine (NBU) or the National Securities and Stock Market Commission (NSSMC) are both contenders. The secondary regulator, charged with inspections, freezing assets, and compliance enforcement, is yet to be determined.
Lawmakers expect substantial amendments by the second reading, signaling fluid dynamics in implementation specifics.
Economic Implications: Formalizing a $10B Crypto Market
Ukraine’s crypto economy is both sizable and dynamic. According to Chainalysis, Ukraine ranks 8th globally in crypto adoption—with particularly high levels in retail, institutional, and DeFi usage.
Analysts estimate that legalizing and taxing the sector could reclaim as much as $10 billion in economic activity, channeling it into the formal economy and supporting defense and reconstruction efforts.
Volodymyr Nosov, CEO of European crypto exchange WhiteBIT, said this move opens “a window of opportunity for attracting crypto investments and repatriating foreign assets of Ukrainian crypto enthusiasts,” making it a key factor for revitalizing the economy and modernizing the market.
Global Context of Crypto Taxation
Countries worldwide are grappling with how to tax cryptocurrencies:
- Denmark proposed taxation on unrealized gains in October 2024.
- Brazil, in June 2025, imposed a 17.5% flat tax on crypto gains.
- In the US, hearings are underway in 2025 to develop a more structured crypto tax framework.
Ukraine’s approach—with differential rates, exemptions, and incentives—signals a relatively progressive yet pragmatic path tailored for wartime exigencies and alignment with international norms.
A clear infographic or chart illustrating:
- Tax rates: 18% income tax + 5% military tax on crypto gains; 5% preferential rate on crypto-to-fiat in year one; exemptions for crypto-to-crypto and stablecoins.
- Timeline: First reading passed on September 3, 2025; second reading anticipated; effective date of law planned for January 1, 2026.
- Estimated economic impact: Potential $10 billion in captured value; ranks 8th globally in crypto adoption.
Conclusion
Ukraine’s move to legalize and tax cryptocurrencies marks a monumental step toward integrating one of the world’s most dynamic crypto markets into the formal economy. With an 18% income tax and 5% military tax, alongside an introductory 5% fiat conversion incentive and strategic exemptions, the legislation balances revenue generation, defense funding, and innovation encouragement.
Although the regulatory architecture remains to be finalized—particularly the roles of the NBU and potential secondary authority—the bill signals Ukraine’s commitment to digital asset formalization. Its adoption could recover up to $10 billion in economic activity, modernize the financial system, and attract global crypto investment, all while upholding transparency and oversight.
For entrepreneurs, crypto investors, and blockchain practitioners, Ukraine’s evolving legal framework offers both opportunities and responsibilities. As the bill advances to its second reading and eventual enactment—potentially effective from January 1, 2026—stakeholders should remain alert to regulatory updates and compliance requirements.
