Ukraine’s Unregulated Cryptocurrency Market May Have Cost $49 Billion: Study
A Missed Opportunity
According to a recent study, Ukraine has incurred nearly $49 billion in losses between 2016 and 2022, attributed to the country’s failure to regulate its crypto sector. This study, a collaborative effort by the Ukraine Economic Outlook, Kuna–a crypto exchange, and the Blockchain Association of Ukraine, divulges the potential revenue the nation could have amassed had it enforced levies on cryptocurrency trading. An additional $10.4 billion could have been added to Ukraine’s coffers based on these computations.
The Bitcoin Boom and Austerities in Ukraine
The report exhibits an uneven distribution of potential tax revenue over the years examined. The majority of potential income was lost during the crypto bull market years 2017 and 2020, tallying up to $23.3 billion and $14.9 billion, respectively. These estimates were conjectured based on Ukrainian crypto trading data, domestic mining pool income, and stablecoin transaction information.
Mining For Revenue
Besides trading, the study suggests another potential source of revenue for the treasury—the miners. Crypto mining could have relatively contributed to the nation’s benefits. The study estimates it could have garnered approximately $7 billion for the Ukrainian Treasury over the same period.
Government Response – Time to Come in from the Cold?
Backing the study’s findings, Ukraine’s Deputy Prime Minister for Innovation, Education, Science, and Technology, Mykhailo Fedorov, has expressed support for crypto regulation. He firmly believes it’s time to bring the crypto sector out from the shadows and into the mainstream financial sphere. He proposes creating a special tax system for crypto, with tax rates of 5% for individuals and 18% for companies.
Regulator’s Gauntlet and Road Ahead
Despite past attempts at regulation leading to a dead-end, the political climate in Ukraine seems to be warming up to the idea of taxing crypto. A bill to impose taxes on crypto-related profits was approved by lawmakers in early 2022. However, a delayed rollout due to outlying circumstances, including the outbreak of war, further hampered progress.
In a separate yet related incident, Russian police suspect a crypto influencer known as Bitmama, dubbed the “Queen of Crypto,” of sending tokens to support Ukraine’s military. This further accentuates the need for regulatory oversight in the crypto industry.
Unleashing the Potential of Crypto
The authors of the study assert that effective regulation of the crypto sector can lead to significant advantages. Apart from boosting the nation’s budget, it can help legitimate the industry, thus attracting a new wave of investors. As Ukraine grapples with economic challenges, can we expect crypto regulation to be a prominent part of their financial game plan? Only time will tell.