Ukraine Proposes 23% Tax on Crypto Transactions with Stablecoin Exemptions

TLDR

• Ukraine’s financial regulator proposes 23% tax (18% plus 5% military levy) on certain crypto transactions
• Crypto-to-crypto trades and stablecoins may be exempt from taxation
• Framework addresses mining, staking, airdrops and hard forks with various taxation options
• Tax-free thresholds for small investors are being considered
• Ukraine is aligning with EU crypto regulations as part of its broader European integration

Ukraine’s National Securities and Stock Market Commission (NSSMC) has unveiled a comprehensive crypto taxation framework that would impose a 23% tax on certain digital asset transactions while exempting others. The proposal, released on April 8, represents the country’s first attempt at creating a structured approach to crypto taxation amid ongoing wartime economic challenges.

The framework would apply Ukraine’s standard 18% personal income tax plus a 5% military levy on crypto transactions. This levy was introduced last December as part of Ukraine’s wartime financing measures.

Under the proposal, only specific crypto activities would trigger tax obligations. Converting cryptocurrencies to traditional currency (fiat) or using them to purchase goods and services would be taxable events.

However, the proposal includes several key exemptions. Crypto-to-crypto transactions would not be taxed, bringing Ukraine in line with European countries like Austria and France, as well as Singapore.

Stablecoins backed by foreign currencies may receive preferential treatment. The NSSMC suggests these could be fully exempt or subject to lower rates of 5% or 9% since Ukraine’s tax code already excludes income from foreign exchange transactions.

Mining and Staking Considerations

The framework addresses various crypto activities beyond simple trading. It suggests mining could be classified as a business activity for tax purposes but mentions the possibility of tax-free thresholds for small-scale miners.

For staking, the NSSMC proposes either treating earnings as business income or only taxing them when converted to fiat currency. This flexibility acknowledges the various ways users interact with crypto assets.

Hard forks and airdrops present unique challenges. The regulator floats options that include taxing these as ordinary income or only when tokens are cashed out for traditional currency.

NSSMC Chairman Ruslan Magomedov emphasized the framework’s practical importance, stating that “the issue of crypto taxes is not a hypothesis, but a reality that is fast approaching.”

International Models and Social Equity

Ukraine’s approach draws inspiration from jurisdictions with established crypto-friendly tax policies. The proposal specifically mentions Austria, France, Singapore, Malaysia, and Georgia as reference points.

The framework includes provisions for social equity. Tax-free thresholds for small investors would “relieve the burden” on those with modest holdings, the NSSMC notes.

Other potential exemptions could apply to cryptocurrency donations, transfers between family members, and long-term holders. However, these exceptions might not extend to users of non-custodial wallets.

In his April 8 statement, Magomedov explained that the agency created this framework to help lawmakers make an “informed resolution” by weighing each option’s advantages and disadvantages, as “these aspects can have a critical impact on the market and tax liability.”

Broader Regulatory Context

The tax framework represents just one piece of Ukraine’s developing crypto regulatory landscape. The National Bank of Ukraine is simultaneously working on legislation to define regulatory oversight of the crypto industry, expected to be completed by October 2025.

This regulatory effort builds on foundations laid in March 2022, when President Volodymyr Zelenskyy signed a law establishing the legal framework for Ukraine’s regulated crypto market.

Ukraine’s approach aligns with European Union standards. The country has been an EU membership candidate since 2022 and is crafting its crypto regulations based on the EU’s Markets in Crypto Assets (MiCA) regulation.

A 2024 analysis from Swiss blockchain firm Global Ledger estimated that Ukraine could collect over $200 million annually in taxes from crypto transactions. This revenue potential adds urgency to establishing clear tax guidelines.

By formalizing its crypto tax structure, Ukraine aims to prevent financial abuse while promoting “legal and responsible use of digital assets,” according to Magomedov. He added that “establishing fair and understandable taxation rules is also a prerequisite for attracting investment and integrating the Ukrainian virtual asset market into the global financial market.”

The NSSMC has already presented draft legislation based on this matrix to Ukraine’s parliamentary finance committee. This marks a concrete step toward implementing the proposed framework rather than merely discussing theoretical options.

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