Why is the NBU trying to regulate the crypto market?

Project Manager of the NBU Open Markets Department, Emal Bakhtari, revealed the National Bank’s vision of the future of the crypto industry in Ukraine. He assures that the NBU is trying to regulate the crypto market in order to protect its participants from the arbitrariness of the security forces.

Despite the fact that four bills on cryptocurrency have already been registered in the Verkhovna Rada of Ukraine, they lie dead weight and are unlikely to be adopted. According to the Representative of the NBU, Emal Bakhtari, these legislative initiatives are of dubious quality, are completely uncoordinated and provide illogical preferences, which suggest the corruption component of this state of affairs with the adoption of the necessary regulations.

At the beginning of the year, the National Bank announced its intention to develop a bill on cryptocurrency. To develop a new bill, a working group was created, which included both representatives of state regulators and crypto market participants.

  So today it is precisely defined what cryptocurrency is not:

  Cryptocurrencies are not a currency, because they are not issued by any Central Bank. 

 Cryptocurrencies are not cash because they have no physical form. 

Cryptocurrencies are not electronic money, since they are not tied to the accounts of banks or other financial organizations.

According to Emal Bakhtari, today the main task has not been completed - a clear definition of cryptocurrency has not been developed. 

According to the NBU, cryptocurrency is a certain financial asset. Based on this, it should be regulated by the National Securities Commission, bought and sold, taxed and declared.

The NBU working group has already decided on an approach to the legal status of digital money and has written two bills. They are still raw and require improvement. The first determines the legal status of cryptocurrency, cryptocurrency operations and their instruments - ICO, mining and tokens. The second law determines tax rates and amendments to the Tax Code of Ukraine.

However, according to the official, cryptocurrency has enough problems and they require additional solutions.

So, according to Bakhtari, the issue of determining the rate of cryptocurrency does not fall under generally accepted market rules. 

Another problem is the anonymity of accounts. Having only a login and password when conducting transactions makes digital money attractive for corruption, terrorism, arms and drug trafficking.. In Ukraine there is no, and it is unlikely to appear in the near future, equipment and specialists ready to monitor such financial flows.

The issues of mining have also not yet been resolved. Difficulties in determining the cost and profitability of the process leave this question open.

Summarizing, Bakhtari noted that the NBU is trying to regulate the crypto market, first of all, to protect its participants from the security forces. While this area is not defined at the legislative level, law enforcement agencies can interpret such activities at their discretion. Including in the interests of personal gain at the expense of business.

In addition, the highly profitable industry should not evade taxes; it is time for it to create civilized conditions for emerging from the shadows.