Ukraine’s failure to adequately regulate the crypto sector cost the nation just shy of $49 billion in the period 2016 to 2022, a study has found.
The study was carried out by Ukraine Economic Outlook, in association with the crypto exchange Kuna and an industry group named the Blockchain Association of Ukraine.
The report’s authors claimed that since 2016, Ukraine could have raised some $10.4 billion worth of tax revenue by introducing levies on crypto trading.
The authors wrote that this figure “equates to between $7 billion and $1.5 billion lost annually.”
But they conceded that the potential tax income was “unevenly distributed,” and that most of the “lost” tax income came from the crypto bull market years of 2017 ($23.3 billion) and 2020 ($14.9 billion).
The study authors said they calculated the losses using Ukrainian crypto trading data, as well as domestic mining pool income, and stablecoin transaction information.
The authors noted that taxing crypto miners between 2016 and 2022 could have raided $7 billion for the Ukrainian Treasury.
Politicians say they are taking steps to address the regulatory gap, with Kyiv ready to adopt EU MiCA-inspired measures.
Ukraine Poised to Regulate and Tax Crypto?
On Facebook, Ukraine’s Deputy Prime Minister for Innovation, Education, Science, and Technology Mykhailo Fedorov, responded to the study, saying it was “time to bring the crypto sector out of the shadows.”
Fedorov wrote:
“We must create a special tax system for the [cryptoasset] market. […] Creating […] taxes for the crypto industry will help [legitimize] this new segment of the economy, provide a boost for the country’s budget, and increase Ukraine’s attractiveness to investors.”
The Deputy Prime Minister said Kyiv wants to tax crypto-related incomes at 5% for individual citizens and 18% for companies.
Ukraine has attempted to tax crypto in the past, but has faced a series of obstacles.
In early 2022, lawmakers signed off on a bill that would have imposed taxes on crypto-related profits, but the draft law hit a last-minute hurdle.
🇺🇦 Russian ‘Crypto Queen’ Suspected of Sending Coins to Ukraine
Russian police think that a “crypto influencer” known as Bitmama, aka the “Queen of Crypto,” may have sent tokens to support Ukraine’s military.#CryptoNewshttps://t.co/MrWqq3oysR
— Cryptonews.com (@cryptonews) October 19, 2023
The outbreak of war later derailed this effort altogether, but earlier this year senior politicians signaled their intention to follow the EU’s lead on crypto regulation.
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