Ukraine has passed a law legalising Bitcoin, making it one of the first few nations to set ground rules for the cryptocurrency market. This week, El Salvador had adopted Bitcoin as legal tender. Two week earlier, Cuba passed a law recognising cryptocurrencies. The US and Germany both have laws regarding the digital asset.

In an almost unanimous decision, the Ukrainian Parliament passed the Bill drafted in 2020 that provides clarity on the asset and protects its users against frauds. The law seeks to define core crypto terms such as virtual assets, digital wallets and private keys. The Bill now awaits the nod of President Volodymyr Zelensky.

Till now, cryptocurrencies were neither banned in Ukraine nor legal. Although there were no laws to protect them, Ukrainians were allowed to buy and exchange virtual currencies.

Also read: Here's why Bitcoin crashed the day El Salvador accepted it as a legal tender

However, in the absence of the law, Ukrainian law enforcement agencies, which deemed virtual currency as a scam, often raided crypto businesses and “confiscated expensive equipment without any grounds,” reported Kyiv Post.

In August, the Security Service of Ukraine blocked a network of cryptocurrency exchanges in Kyiv, saying it facilitated money laundering and provided anonymity of transactions, according to CNBC.

Despite being legitimised, Ukrainians will not be able to use Bitcoin as currency like the national currency, hryvnia. However, the law permits the citizens to own, exchange and trade cryptocurrencies on local or foreign exchange platforms registered in Ukraine.

Ukraine is betting on its cryptocurrency market to lure businesses and investors by 2022, according to Kyiv Post. President Zelensky recently pitched the country’s market for virtual assets as a selling point for investment in the US. Ukraine’s Minister of Digital Transformation Mykhailo Fedorov also spoke of modernising the payment system to enable the country’s national bank to issue digital currency.

In order to do so, the government would have to amend the tax code and the civil code first. Legalising cryptocurrencies is the first step to that end.

Ukraine has a daily turnover of $37,000 in virtual assets. It joins a few other nations in setting the ground rules on cryptocurrencies. “Only a few countries in the world have legalised crypto assets -- Germany, Luxembourg, Singapore. Ukraine will be one of them,” Fedorov told Kyiv Post.

(Edited by : Shoma Bhattacharjee)