In Ukraine deputies and cryptocurrency, supporters have been diligently developing several draft laws regulating the cryptocurrency market in our country. Their initiators will have to solve several issues: which status to assign to cryptocoins and tokens in Ukraine, whether to impose taxes on mining or not, how to regulate cryptocurrency exchanges operation, and so on. Meanwhile, the market has split into two camps — those who are for and those who are against cryptocurrency legalization. There is no need to regulate something that works perfectly well.
The attorney, Juscutum Law Firm’s managing partner Artem Afian explains why it is important to adopt correct law on cryptocurrency in Ukraine and what it will grant all cryptocurrency market players.
The blockchain means peer-to-peer, decentralization, crypto anarchy, space, defeat of the state. Approximately the same tag cloud surrounded cryptocommunity a couple of years ago. Cryptocurrency seemed to be a weapon and a symbol of victory over fat officials and corrupt police officers. Further on it was followed by a surge in prices, an ICO boom, wallets hacking, high-profile criminal cases, SEC, and nowadays a legal panel’s presence on blockchain conferences has become almost mandatory, and lawyers are rarely thrown rotten tomatoes at and sometimes people even listen to them.
These days, while my team is actively participating in drafting the law “On Cryptocurrency Legalization in Ukraine”, I often have a déjà vu feeling. I have to answer many of the questions coming from 2015, and I’ll try to take some notes of my answers here.
Why do we need regulation? Leave it as it is.
Just splendid thesis. It especially delights me to hear that from people whom I have been advising on the matter which jurisdiction it is better to structure their business in. And the trouble is in the fact that they choose the country with clear rules of the game. No one wants to be structured in Zimbabwe, but this country has no agreements on the information exchange. No wonder DeutscheBank has bought LimpopoBank.
But the example of DeutscheBank does not inspire anyone. Because the presence of game rules is a great asset in this crazy world. Though it is very convenient, to go without any rules, but as far as something happens.
Do not forget that the absence of cryptocurrency status definition precludes large funds and banks from access to digital money, but it provides free access to security forces.
Many people do not like the word “regulation”. It smells of totalitarianism.
I don’t like it either. So I have mentally replaced it with “pilates” and I spend a couple of hours a week doing pilates. But in public, I propose to replace it by the definition “the rules of the game”. Although you are free to come up with your own replacement.
Why do I need tax rules and regulations? Anyway, the tax authorities will prove nothing.
Of course, they will not. And you won’t be able to prove it if the tax inspector believes that Lexus on your Instagram has been bought with laundered money, and the investigator (coincidentally, he turns up to be the inspector’s child’s godfather) will say that the money has been obtained from illicit terrorism financing.
In the best case scenario, a crypto-anarchist will play the role of the shadowy millionaire Koreiko – he’ll be living in and out various European hotels, without possibility to buy a castle or an apartment in Berlin.
Because the modern world is rather rotten place to live in. For five years already these world countries have been wondering about the origin of your money. And the words “peer-to-peer” sound like swearing to banks, and the doors of elite car showrooms get slammed shut in front of him, as the prospect of making love in front of vocational school students in socks and sandals.
Because the world needs people with “white” money. And “white” money, pardon the pun, costs money. It’s kind of a monetary racism. Although, of course, if you are unwilling, you may ignore Ukrainian taxes so far.
Why not to fix a zero tax rate on cryptocurrency?
I’m all for. I would have even established state subsidies for crypto hamsters. You should get in touch at least once with the Ministry of Finance and the Committee on Taxation and Customs Policy to understand that if it would be possible to introduce a draft law on a zero tax rate, it would have been already done for cigarettes, alcohol, and expired vaccines. But Zero Tax Rate Fairy has not visited the Parliament for long time. So you have to deal with the argument: “Let’s introduce the highest rate”. Due to this, we have to distinguish between the idealistic slogans and actual goals.
Why do cryptocurrency exchanges need licenses? What are you talking about?
Cryptocurrency exchanges do not need licenses, it’s for sure. After all, stock and goods exchanges do not need them either. I have even proposed to arrange a rally about it, but I haven’t received support.
Exchange is a regulated business. But to pretend that the cryptocurrency exchange is not the exchange business is wrong.
As for the license, it brings bilateral benefits – it provides a customer an understanding of what to expect from the exchange. Otherwise, everything is built on trust, it is very good, but it scales poorly. The exchange with license has relatively large capitalization. After all, many want to be bought by Goldman Sachs for $400 million, and work with fiat money to the bargain.
Regulator will terrorize us.
Of course. If you don’t work with it. The tradition of Ukrainians to conflict with their own country is great in its democratic basis, but it is of a little help for businesses to grow. But the Swiss have embraced the regulator, have been carrying out conference with it and making a ton of money so that its almost enough for them. Gibraltar and Malta use the regulator as their main promo.
The regulator may become not just an ally, but an excellent advertising tool of professional cryptocurrency market players. A simple conference or a photo with the regulator’s leader will tell your potential partners and customers that you are all right.
Those representatives of the Ukrainian government agencies, the members of working groups, are open, educated and well-aware people. It’s the best time to sit down to table with them and work, not only for the sake of Ukraine as a whole but for the sake of your own business.