One significant event passed somewhat unnoticed to the cryptocurrency community of Ukraine. At the end of last month, March 22, the National Bank of Ukraine officially canceled the document the legally defined Bitcoin as a cash equivalent.
The status of cash equivalent had been defined for cryptocurrency by NBU in 2014 by the Letter № 29–208/72889 which stated:
Bitcoin is cash equivalent which has no real cost assurance.
At the end of last year, the regulators of the financial market of Ukraine published the joint announcement on their position about cryptocurrency regulation in the world and Ukraine, and about risks connected to the cryptocurrency operations. This announcement clearly defined that, for the Ukrainian legislation, “cryptocurrencies… are not cash equivalents.” However, until the Letter №29 was not officially canceled, it had had the legal power. This way, the world biggest cryptocurrency by capitalization was legally considered cash equivalent in Ukraine, which was reflected in the judicial practice.
A lawyer of the IT sector and telecom Office on the effective regulation (BRDO) Igor Samokhodskii mentions that such definition had a significant negative effect on the cryptocurrency development in Ukraine since the law “On the National Bank of Ukraine” states:
Emission and circulation of other currency units and the use of cash equivalents as the means of payment are forbidden on the territory of Ukraine.
Besides this, the NBU Letter stated that the “authorized banks have no legal bases for proceeding the foreign currency received from the selling of Bitcoin abroad,” and the activity on Bitcoin exchange to any foreign currency has the signs of financial pyramids and can evidence about the fraudulent activity such as money laundering or terrorist financing.
This way, cryptocurrencies were considered almost illegal in the public circulation.
Last year, NBU reviewed its attitude to the cryptocurrencies. As was mentioned above, in November last year, a number of regulatory bodies, among them NBU, National Commission on Securities and Fund Market, and National Commission that fulfills the regulation in the sphere of the financial services markets, published a press release where they mentioned that “cryptocurrency cannot be defined as a cash equivalent.”
However, as Igor Samokhodskii indicates, the press release is not an official document of NBU, and it would have been appropriate to officially call off the Letter together with the press release publishing. But this didn’t happen.
Eventually, on March 22, NBU issued a Letter N 40–0006/16290 which attributed the previous Letter on Bitcoin as a cash equivalent to irrelevant ones. So one can hope that the cryptocurrency owners won’t risk paying with the cash equivalents anymore.