The State Financial Monitoring Service of Ukraine has announced its official position regarding cryptocurrencies

The State Financial Monitoring Service of Ukraine has announced its official position regarding mining, digital currencies and the identification of participants in transactions related to cryptocurrency. The text of the statement can be found on the official website.

The first thing worth noting is that representatives of the State Financial Monitoring Service announced their decision to be guided by the position of the Financial Action Task Force (FATF) when considering these issues.

According to the FATF definition, a virtual currency is a means of expressing value that can be traded digitally and that functions as a medium of exchange, a unit of account, or a store of value, but does not have the status of legal tender in any jurisdictions.

Virtual currency is not issued or secured by any jurisdiction and performs the above functions only based on the consent reached within the virtual currency user community (peer-to-peer network). In turn, electronic money is a digital way of expressing fiat currency.

The position of the FATF and, accordingly, the State Financial Monitoring Service regarding the identification of PPPV participants is that the main regulatory attention in the process of identifying and taking due diligence measures for the client’s individual, as well as risk-based monitoring of the client’s financial transactions, should focus on centers that provide access to the holders of convertible virtual currencies to the regulated financial system.

To such centers include: providers of exchange services (exchangers or exchanges) of virtual currencies, virtual currency wallet providers and any other persons who are intermediaries between the regulated financial system and cryptocurrencies.

The State Financial Monitoring Service, based on the recommendations of the FATF, takes the position that the above entities are obliged to comply with the requirements defined by the Law of Ukraine “On Preventing and Combating the Legalization (Laundering) of Proceeds from Crime, the Financing of Terrorism and financing the proliferation of weapons of mass destruction."

Fulfillment by these entities of obligations in the field of financial monitoring will ensure the implementation of due diligence measures, the conduct of mandatory and internal financial monitoring, and the implementation by the State Financial Monitoring Service of measures for the collection, processing and analysis of information on financial transactions.. 

In case of suspicion, this will allow generalized materials to be sent to law enforcement agencies authorized to make decisions in accordance with the Criminal Procedure Code of Ukraine.

The document also states that after agreeing on final decisions on the legal status of cryptocurrencies, taking into account the provisions of the FATF Recommendations and European Directives, Gosfinmonitoring plans to prepare changes to national legislation on state regulation and supervision of cryptocurrencies in in general.

Recall that at the end of January The cyber police of Ukraine represented by Sergei Demidyuk demanded to determine the status of cryptocurrencies in the country.

According to http://www.sdfm.gov.ua