Ukraine Proposes 23% Tax on Crypto Income – Exemptions for Stablecoins and Crypto-to-Crypto Transactions

BetDaddy’s Takeaways

🟠 Ukraine's securities regulator has proposed a 23% tax on crypto income, combining income and military taxes.

🟠 Crypto-to-crypto transactions and stablecoins backed by foreign currencies may be exempt.

🟠 New rules would apply when crypto is cashed out or used for goods and services.

Ukraine is entering the crypto taxation arena with a bold proposal: a 23% total tax on crypto income. The move, crafted by the country’s Securities Regulator, the National Securities and Stock Market Commission (NSSMC), seeks to help lawmakers shape the regulatory framework, as crypto becomes a real part of the national and global economy.

The proposed framework, announced on April 8, combines an 18% personal income tax with a 5% military levy, directly targeting profits made from crypto transactions that are either converted to fiat currency or exchanged for goods and services. Exemptions are suggested for Crypto-to-crypto transactions and stablecoins, particularly those backed by foreign currencies.

"The issue of crypto taxes is not a hypothesis, but a reality that is fast approaching," said NSSMC Chairman Ruslan Magomedov, communicating the urgency behind the initiative.

Tailored Suggestions for Crypto Activities

Apart from basic trades, the proposal explores taxation approaches for a variety of other crypto-related activities:

Mining may be treated as a business activity but could include a tax-free threshold to ease burdens on small-scale miners.
Staking might be taxed only when profits are cashed out or be considered as business income.
Hard forks and airdrops could be taxed either immediately as income or later, upon token disposal.
The NSSMC is even considering exemptions for donations, family transfers, and long-term holders, although non-custodial wallets might be excluded from those perks.

This layered approach reflects a growing global trend, striking a balance between regulating crypto markets and supporting innovation. The proposed exemptions for crypto-to-crypto transactions align Ukraine with countries like Austria, France, and Singapore, which recognize the need to avoid stifling market flexibility.

Crypto Income Tracking and Reporting Challenges

Although the intention is to create fair and forward-thinking legislation, the Commission acknowledges the serious challenges that lie ahead. Most notably, the decentralized nature of crypto, the rise of self-hosted wallets, and peer-to-peer exchanges make tracking and enforcing taxation extremely complex tasks.

In its 32-page consultation paper, NSSMC recognizes that:

“Unlike traditional income, where a tax agent withholds the tax, in the case of virtual assets, this responsibility typically falls on the individual”.

Crypto’s volatile price swings only add to the challenge, and may create unrealistic tax burdens based on “paper gains” that disappear overnight.

To counter this, the NSSMC suggests the need for simplified reporting models and digital tools to help citizens comply with tax obligations without being overwhelmed.

Legal Landscape in the Works

The proposed taxation plan comes as a continuation of Ukraine’s crypto regulatory framework. In March 2022, President Volodymyr Zelenskyy signed the country’s first law recognizing digital assets, and a draft bill to legalize crypto was confirmed to be under review by Daniil Getmantsev, head of the Ukrainian Parliament’s tax committee, in late 2023.

Stay tuned on BetDaddy for the latest headlines, updates, and deep dives into the world of crypto news, regulations, and how they shape the future of crypto transactions.