- The second day of Incrypted Conference 2023 took place on June 11
- The program of the event included, among other things, a panel discussion
- Presentatives of the Commission on Securities Market, the NBU and the Ministry of Digital
- The parties examined the problems of cryptocurrency regulation and answered some important questions
On Sunday, June 11, in offline mode, the second day of the largest Web3 event in Ukraine, Incrypted Conference 2023, took place.. In the center of attention was the panel discussion devoted to the legalization of cryptocurrency in our country.
The list of participants you can see here. It should be noted that among the speakers were representatives of big business, including domestic, the Ministry of Digital and the NBU.
The panel discussion at the Incrypted Conference 2023
The panel discussion was held in two stages. At the first session the participants discussed what cryptocurrency is and who benefits from it in Ukraine today.</nbsp;
But before that we recommend you to read the most striking quotes:
- “We cannot live without cryptocurrency” – Yulia Parkhomenko.</nbsp;
- “100% of Ukrainian universities teach religious studies.. But none of them has a course dedicated to virtual assets” – Eugene Pronin.
- “If we don’t set the rules of the game, the street will do it for us” – Eugene Pronin.
- “Our country could become the first to adapt and adopt MiCA” – Yuri Boyko.</nbsp;
- “If it (cryptocurrency) quacks, floats and looks like a duck, it is a duck” – Arsen Makarchuk about virtual assets being similar to financial instruments.
Why did the Ministry of Digital Economy focus specifically on cryptocurrency?
“If we talk about cryptocurrency, about blockchain, this is something that the world simply cannot live without” – Director of Digital Economy Yulia Parkhomenko.
In the discussion Yulia pointed out several important things. First, the ministry created a group to integrate blockchain-based solutions into the public sector.
In addition, the ministry developed a free educational course for newcomers to the industry. It seems to be about the cases in the application “Dia”.
And does Ukraine need virtual assets? And what does the legal practice in this industry look like?
“This (CA sphere) is, first of all, a ready market, a fully developed segment. And you can’t ignore it,” says Petr Bilyk, Director of Innovation at Juscutum.
In his speech, Petr noted several “weaknesses” in the Ukrainian legal framework with regard to cryptocurrencies.
The first, and perhaps most important, is the taxation problem.. The second is the integration of capital derived, for example, from mining into the financial system.
“We hear from most customers that money earned legally has gone gray when investing in cryptocurrency. And we are asked to “whitewash” them” – Yevhen Pronin, Managing Partner of Pronin and Partners Agency.
Panel discussion at Incrypted Conference 2023
Yevhen also made an interesting thesis – in Ukraine there was and still is no transparent way to “legalize” income from cryptocurrencies. And almost always lawyers have to work “in the shadows.”
In the course of his speech, Pronin cited the example of MiCA.. He also expressed hope that it is the Ministry of Securities that will take active steps to develop and integrate regulatory framework in the field of cryptocurrencies.
With regard to current difficulties, Evgen cited another interesting thesis:
“100% of Ukrainian universities teach religious studies.. But none has a course dedicated to virtual assets.”
Why are the rules needed now?
Yulia noted that the Ministry of Finance sees the current regulation of cryptocurrencies precisely as stimulating. The department is studying the prospects of the segment from 2019, but it is now that the field needs regulatory support, which will accelerate the emergence and development of promising startups.
“We need rules.. But primarily not for companies, but for the state. Our state system is not ready for the cryptocurrency business” – Petr Bilyk.
As he said, there is already a certain cluster in the country that is ready to work with cryptocurrency. But the lack of clear and understandable rules on accounting, registration and patenting scares businesses away.
Eugene Pronin highlighted three important benefits of industry regulation:
- clear “rules of the game” stimulate the market;
- the regulatory framework leads to an accompanying infrastructure. An example is UNIT.City;
- “industrialization”. A new segment with high potential serves as an “engine” for the entire economy.
“If we don’t set the rules of the game, the street will do it for us,” Eugene emphasized.
“Weaknesses” of the rulemaking process
“What can go wrong? Everything, literally.. If we pursue a cautious or restrictive strategy, we will simply deprive ourselves of access to a promising market,” said Yulia.
Eugene said the most effective option would be to “borrow” the experience of other countries. He cited Hong Kong as an example.
And what do ordinary conference participants think? At this point, guests were invited to vote.. When asked about their attitudes toward CA regulation, 98 participants said they supported the idea. Fifty-eight voted against it because it would eliminate the upside for cryptocurrency.</nbsp;
With regard to the benefits of regulation, the room highlighted three main upside:
- transparency (115 votes);
- new features and products (80 votes);
- increasing the money volume of the market (74 votes).</nbsp;
The second phase of the panel discussion focused on “The Next Step of Evolution or the End of Freedom.. What will happen in the EU in the next 12-18 months?
“Blockchain offers many opportunities. But the existing regulatory framework did not apply to them. MiCA allows to connect technology and legal frameworks” – Max Heinzle, founder and CEO of 21finance.
Max believes that the new bill is the basis for the subsequent “financial revolution”. He also noted that the very fact of adoption of such a set of rules indicates a progressive mood in the legislative circles of the EU.
“The position of the NBU is that we should move in the direction of European integration.. And MiCA for us is an unconditional benchmark” – Arsen Makarchuk, head of the strategy and development department of the NBU.
But at the same time, said Arsen, the fact that Ukraine is at war cannot be neglected.. And now such global transformation processes are not a priority.
“Most cryptoassets are similar to financial instruments by their nature”, – Yuri Boyko, member of the National Securities and Stock Market Commission.
Panel discussion at Incrypted Conference 2023
Yuri also noted that the regulator has already prepared and published a “draft” bill and amendments to the TC of Ukraine. In addition, the Commission does not rule out the implementation of the DLT directive.
“Our country may be the first to adapt and adopt MiCA” – emphasized Yuri.
Tax of 20% on capital gains in cryptocurrency. Where did this rate come from?”
“We analyzed all the jurisdictions that deal with cryptocurrencies. Most of them reflect income from operations with virtual assets in the same way as in the case of securities (investment income). That’s why we took this rate as the basis,” Yuri said.
Also, a representative of the regulator noted that this is only a proposal so far.. The Commission does not deny the possibility of revising the rate in the future.
The NBU’s position on the prohibition of withdrawals from cryptocurrency exchanges and the view on further regulation of the industry
“The Central Bank is responsible for price stability, including through the implementation of monetary policy. Simply put, if the dollar rate changes, everyone is looking at us. With the beginning of the war, capital outflow from Ukraine, quite predictably and expectedly, increased. In this regard, we had to introduce certain restrictions” – stressed the representative of the NBU.
Arsen stressed that those practices that were used everywhere to “exchange funds” on exchanges, contrary to the current legislation on combating money laundering. It means a broken P2P chain without identification of the final recipient.
“If it (cryptocurrency) quacks, floats and looks like a duck, therefore it is a duck,” Arsen emphasized.</nbsp;
The benefits of regulation from the perspective of the NBU and SEC
Arsen highlighted the following “pluses”
- investor protection and access to professional assistance;
- the possibility of working “in white”;
- expanding business.</nbsp;
The views of guests
The previous stage also asked viewers to answer the question about potential problems with the regulation of the cryptocurrency industry. 116 voted for “the threat of excessive centralization and control,” 90 for “those who make the rules don’t understand the field,” and 80 for “regulation leads to loss of anonymity.”
The full recording of the panel discussion can be viewed on Incrypted’s YouTube channel at this link.