Before the adoption of the Law of Ukraine “On Virtual Assets” (No. 2074-IX of February 17, 2022), the legal nature and terminology related to cryptocurrency and tokens in draft laws of 2017–2019 were constantly changing. In various versions, cryptocurrency was defined as either a software code, a financial asset, or a digital record in a distributed ledger. This reflected the absence of a unified legislative approach to the definition of fundamental concepts, and the failure to adopt a law in this area created legal uncertainty.
The situation is expected to change with the adoption of the Law of Ukraine “On Virtual Assets.”
Article 1 of this Law provides that a virtual asset is an intangible good that is an object of civil rights, has value, and is expressed as a set of data in electronic form. The existence and circulation of a virtual asset are ensured by a system for the circulation of virtual assets. A virtual asset may certify property rights, including claims to other objects of civil rights.
The Law will come into force on the date when the Law of Ukraine on Amendments to the Tax Code of Ukraine concerning the taxation of transactions involving virtual assets enters into effect.
Currently, the draft law “On Amendments to the Tax Code of Ukraine and Certain Other Legislative Acts of Ukraine Regarding the Regulation of the Circulation of Virtual Assets in Ukraine” (No. 10225-d of April 24, 2025) is under consideration by the Verkhovna Rada. On September 3, 2025, the draft law was adopted as a basis with provisions to be further refined.
Thus, the legislative process regulating cryptocurrency circulation is nearing completion, and it is expected that a new law will soon be enacted.
International Experience in Regulating Virtual Assets
The European Union’s approach to virtual assets was first established in the Directives of the European Parliament and the Council of the EU 2018/843 (May 30, 2018) and 2015/849 (May 20, 2015). These documents introduced the term “virtual currencies,” defined as a digital representation of value that is not issued or guaranteed by a central bank or public authority, not necessarily linked to a legally established currency, and does not have the legal status of currency or money.
At the same time, such value is accepted by natural or legal persons as a means of exchange that can be transferred, stored, and traded electronically. This definition is technologically neutral, as it is not tied to a specific system, such as blockchain.
Further, the Markets in Crypto-Assets Regulation (MiCA) was adopted by the European Parliament and the Council of the EU on May 31, 2023, and officially published in October of the same year. The main purpose of this regulation was to create a single legal framework for crypto-asset circulation across the EU, ensuring a higher level of protection for investors and users, and establishing transparent requirements for crypto-service providers.
A key innovation was the shift from the narrow term “virtual currency” to the broader and more flexible concept of a “crypto-asset,” reflecting the technological evolution of digital value.
Under MiCA, a crypto-asset is defined as a digital representation of value or rights that can be stored and transferred electronically using distributed ledger technology (DLT) or other similar systems. This approach maintains technological neutrality and ensures the stability of legal regulation, regardless of how crypto-instruments are implemented.
The European Central Bank (ECB), consistent with MiCA, uses the term “crypto-assets” to denote any assets that exist in digital form, do not create financial obligations for any natural or legal person, and do not embody property rights in relation to an enterprise or issuer.
Both the European and FATF approaches recognize virtual assets as legitimate objects of property rights, capable of being the subject of transactions subject to legal and financial regulation.
Virtual Assets and the Application of Tax Legislation
The State Tax Service of Ukraine currently proceeds from the assumption that the taxable object is not the cryptocurrency itself, but the funds received from transactions involving it.
For individuals, income from the sale of cryptocurrency is included in the total annual taxable income:
- as foreign income, if the source of payment is abroad; or
- as other income, if paid by a resident within Ukraine.
Such income is subject to personal income tax (18%) and a military levy (5%).
If the income is paid by a tax agent (for example, a Ukrainian resident purchasing cryptocurrency from an individual), that agent withholds and pays the taxes. However, if payment comes from foreign exchanges or entities that are not tax agents, the individual must declare the income in the annual tax return and pay the taxes independently.
At present, the tax authorities consider that cryptocurrency is not an “asset” under current legislation and therefore cannot be used as a form of income or a resource subject to accounting and reporting.
Thus, Ukraine currently applies only the general taxation principle of income: it is not the virtual assets themselves that are taxed, but the money received from transactions involving them. This creates significant legal uncertainty, especially for entrepreneurs, highlighting the need for amendments to the Tax Code of Ukraine.
Judicial Practice Regarding Cryptocurrency in Ukraine
There are already examples in Ukrainian judicial practice where courts have recognized cryptocurrency as an object of ownership rights.
For instance, in case No. 991/2755/25 (ruling of the High Anti-Corruption Court of April 3, 2025), the court explicitly referred to the Civil Code of Ukraine, stating that ownership rights extend to virtual assets. The court held that possession of a seed phrase or private key constitutes actual possession.
Accordingly, cryptocurrency was seized as property in a criminal proceeding.
This case demonstrates that Ukrainian courts are forming an approach recognizing virtual assets, specifically cryptocurrency, as objects of property rights. From a legal standpoint, this allows cryptocurrency to be treated as property within the meaning of the Civil Code of Ukraine.
Under Article 190(1) of the Civil Code, property includes a thing, a collection of things, and property rights and obligations.
Under Article 179-1(1), the concept of a digital thing includes virtual assets, digital content, and other intangibles.
The definition of “assets” in the National Accounting Standard (NAS) 1 “General Requirements for Financial Reporting” — as resources controlled by an enterprise as a result of past events and capable of bringing future economic benefits — emphasizes their property nature and economic value.
Thus, if general civil-law provisions on things can be applied to virtual assets, they may be subject to civil transactions: they can be alienated, circulated, inherited, judicially protected, contributed to authorized capital, seized or enforced, and included in accounting and taxation systems.
Planned Legislative Changes
On September 3, 2025, the Verkhovna Rada adopted as a basis the draft law amending the Tax Code of Ukraine and certain other legislative acts regarding the regulation of virtual asset circulation in Ukraine, developed in accordance with EU standards.
The main purpose of the draft law is to establish a legal mechanism for regulating virtual asset circulation in Ukraine, ensuring their lawful use, proper taxation, and effective protection of market participants’ rights.
The draft law introduces significant innovations in the taxation of virtual assets, as well as amendments to the Law of Ukraine “On Virtual Assets,” which may enter into force on January 1, 2026.
It classifies all virtual assets into three main categories:
- Asset-referenced tokens — their value is stabilized by being linked to assets such as currency or property;
- E-money tokens — pegged to a single official currency;
- Other virtual assets — encompassing those not included in the first two categories.
Under this model, the regulator will determine which virtual assets (apart from asset-referenced and e-money tokens) belong to the third category.
Key Provisions of Draft Law No. 10225-d:
- Definitions: clarified the terms “virtual assets,” “token,” “virtual asset service providers (VASPs),” and “issuers of virtual assets”;
- Regulation of service providers: set requirements for authorization or registration (for certain categories) within 60 days after approval, annual reporting, and liability for violations (fines);
- Taxation: introduced tax rules for operations involving virtual assets, including corporate income taxation, VAT exemption for virtual asset transactions, and individual taxation based on financial results from such operations;
- Rights protection: defined mechanisms for client and investor protection, including regulation of advertising and anti-fraud measures;
- Penalties: established fines from 0.5 to 100 times the minimum wage for non-reporting or other violations.
The draft introduces a new definition of “virtual asset” as a type of digital thing that is created, transferred, and stored electronically using distributed ledger technology or similar systems.
The law also specifies that virtual assets are not money and cannot be used as an official means of payment in Ukraine, except in cases explicitly provided by law. It also distinguishes between the National Bank’s digital currency (e-hryvnia) and private tokens, confirming that the former does not fall under the category of virtual assets.
The draft law requires that companies engaged in virtual asset operations must be registered in Ukraine as joint-stock companies or limited (or additional) liability companies, have a registered office in Ukraine, at least one resident director, and conduct effective management from Ukrainian territory.
Businesses in the virtual asset sphere will be required to implement anti-money-laundering (AML) procedures, including KYC, transaction monitoring, and reporting of suspicious operations, in accordance with EU requirements (AMLD, MiCA).
Foreign crypto exchanges will be permitted to operate in Ukraine under a simplified authorization procedure, provided they are registered in EU or regulator-approved jurisdictions.
This draft law harmonizes Ukrainian legislation with international AML and anti-money-laundering standards related to virtual assets.
Thus, implementing standards inspired by MiCA into the Ukrainian legal framework can serve as a strong positive impulse for the development of the crypto market. The official introduction of transparent regulatory mechanisms will strengthen investor confidence, attract financial institutions and international partners, and contribute to investment inflows, legalization of crypto business, and the creation of a stable, competitive virtual asset market in Ukraine.
At the same time, regulation will also bring certain challenges. Businesses will need to adapt to new compliance, legal, and technical requirements, potentially increasing operational costs. Companies previously operating in the shadow market may face legalization difficulties, and there is a risk of excessive regulatory pressure that could inhibit innovation.
Nevertheless, in the long term, the legislative regulation of crypto-asset circulation will open new opportunities for digital entrepreneurship, facilitate cooperation with banks, payment systems, and investors, and enable Ukrainian companies to enter global markets with transparent legal status.
This represents a key step toward integrating Ukraine’s digital economy into the European and global legal space.