The legalisation of cryptocurrency: how does it (not) work in Ukraine?

The current situation: taxes exist, but there are no rules

It is legal to hold, buy and sell cryptocurrency in Ukraine — there is no direct ban in any legislation. But that’s where the good news ends.

‘As there is no specific tax regime, the State Tax Service applies the general provisions of the Tax Code to crypto income. The logic is as follows: if you sell crypto and receive money, this is either ‘foreign income’ (if paid by a foreign exchange) or ‘other income’ (if the buyer is a resident of Ukraine). The standard rate is 18% personal income tax plus a 5% military levy. That’s 23% in total. And here lies the key nuance of the current regime, neatly concealed: in its individual consultations — including the latest clarifications from 2025–2026 — the State Tax Service insists that the entire amount received from the sale is taxable. “Not the profit, not the difference between the purchase and sale price — but the entire amount,” says the lawyer.

In other words, if you bought Bitcoin for $10,000 and sold it for $11,000 — from an economic perspective, you made a profit of a thousand. From the State Tax Service’s perspective, you received income of $11,000, and it wants 23 per cent of that specific amount.

And in fact, the tax authority’s argument is strikingly simple: the Tax Code contains no mechanism for verifying the costs of acquiring cryptocurrency — so there is nothing to deduct. The fact that there is no such mechanism – because the state itself has failed to pass the relevant legislation for four years – does not seem to trouble anyone in this line of reasoning.

The legal community strongly disagrees with this position, as, in economic terms, cryptocurrency is an investment asset, and it is the financial return that should be taxed, just as is the case with shares, for example. But until the dispute is resolved at the legislative level, the tax authorities have an individual tax ruling, and you face a risk.

How a citizen can ‘regularise their status’ today: a guide without referring to the law

If we set aside yet another wave of negative emotions and focus on purely practical matters, there is a procedure that can protect you from fines, and it looks something like this.

Firstly — declare

Income from the sale of cryptocurrency during a calendar year must be included in the declaration of assets and income, which must be submitted by 1 May of the following year.

Tax and duties are payable by 1 August: if you sold crypto in 2026, you must submit your declaration by 1 May 2027 and pay the money into the budget by 1 August 2027.

Crypto income goes under the headings ‘foreign income’ or ‘other income’ — there is still no separate line for virtual assets on the form, which perfectly illustrates the system’s level of readiness for those very 6.5 million people.

Secondly — keep records

This applies, in particular, to exchange statements, transaction histories, bank confirmations, dates, exchange rates, fees and so on.

Yes, the State Tax Service currently states that it is not interested in your expenses. But you will potentially need these documents on three occasions:

1) when a bank blocks a payment and asks you to explain the source of the funds

2) when the special profit taxation regime comes into effect and you need to prove the purchase price

3) when you decide to challenge the tax authorities’ position — either through administrative proceedings or in court

Thirdly — keep track and plan ahead

Income in foreign currency is converted at the NBU’s official exchange rate on the date of receipt — given the behaviour of the hryvnia, this creates a particular surprise, which we’ll come back to later.

And generally speaking — plan your conversions to fiat currency. Whilst the current regime remains in force, with taxation applied to the full sale amount, every extra ‘sell–buy–sell’ cycle involving the hryvnia multiplies the tax base.

Crypto-to-crypto exchanges currently operate in a grey area, but at the very least they do not trigger an obvious taxable event in the form of funds being credited to an account.

Fourthly — do not rely on an amnesty as a guarantee

Everyone has heard about the preferential 5% rate. Yet, for some reason, few people realise that this is a provision of a bill that has not yet been passed.

Fifth — do not try to ‘optimise’

Splitting transfers and using a network of cards is not optimisation, but rather the creation of indicators of fictitious transactions, which financial monitoring systems detect algorithmically.

For businesses and sole traders: it’s even more fun here

If you’re a sole trader on the single tax scheme and are planning to accept payments in cryptocurrency or trade in it — don’t go ahead with it.

The State Tax Service’s position, as set out in the latest individual tax rulings, is categorical: single-tax payers in groups 1–3 must settle accounts exclusively in cash; cryptocurrency is not considered money, and receiving income in it constitutes a breach of the simplified tax system’s conditions, with the risk of being excluded from the simplified scheme altogether.

Moreover, draft law No. 10225-d does not soften this ban but reinforces it: the simplified system and virtual assets are incompatible.

Legal entities operating under the general tax system may formally hold cryptocurrency on their balance sheets — experts recommend accounting for it as an intangible asset — but the taxation of such transactions is again hampered by the absence of specific rules, and payments in cryptocurrency for goods and services remain outside the law: the hryvnia is the sole legal tender in the country.

Relations with banks are a separate issue. The NBU classifies the purchase of cryptocurrency as ‘quasi-cash’; from 2023, banks are advised not to process such transactions from hryvnia cards, so the market has shifted en masse to P2P.

And P2P is a magnet for financial monitoring: regular transfers between different people, a limit of 150,000 UAH per month on card transfers, and suddenly your account is blocked, with the bank requesting documents proving the origin of the funds.

PrivatBank and monobank do this systematically, and both openly admit that receipts from the exchange alone may not be enough to have the account unblocked.

The result is a system in which the state provides no legal channel for withdrawing funds — and punishes people for using illegal ones.

What happens if you don’t declare it?

The ‘under-the-table’ option still seems temptingly simple, so I’ll briefly outline the real cost of it.

“There’s a fine for failing to submit a tax return, but it’s a token 340 UAH (1,020 UAH for a repeat offence). Ridiculous? For now, probably so, but let’s look further — if the State Tax Service itself uncovers undeclared income and assesses additional tax liability, there’s a 10 per cent surcharge on the amount; 25 per cent if wilful intent is proven; and 50 per cent for a repeat offence.

Add to that a penalty for non-payment (up to 25–50 per cent for wilful non-payment) and a daily interest charge. The tax authorities have 1,095 days to impose additional tax — three years from the deadline for submitting the tax return.

“And if the tax return has not been filed at all, the limitation period does not apply,” says the lawyer.

Criminal liability under Article 212 of the Criminal Code arises from a ‘significant amount’ of unpaid taxes — in 2026, this is from 4,992,000 UAH.

The threshold does indeed seem high — it will not affect most retail investors, but for those who liquidated their portfolios during 2020–2021, six-figure sums in dollars are nothing out of the ordinary.

Additional tax assessments covering the past three years, plus frozen accounts — this is a perfectly common scenario.

And the argument that ‘the tax authorities won’t find out anyway’ is rapidly becoming outdated.

The lawyer points out that, as of 1 July 2026, a Ministry of Finance order on the implementation of the updated CRS 2.0 standard came into force in Ukraine: crypto exchanges, custodians and e-wallet issuers will become reportable financial institutions.

At the same time, the OECD is launching CARF — a global system for the automatic exchange of data on crypto transactions, with the first exchanges expected in 2027.

In other words, a verified account on Binance or Bybit is simply a delayed report to the State Tax Service. Meanwhile, the banking sector’s financial monitoring authorities can already see your P2P transfers, and the international exchange will complete the picture the day after tomorrow.

The situation in which the ‘shadow economy’ was ‘free’ is coming to an end — and this is happening faster than parliament can pass laws.

What Bill No. 10225-d promises — if it ever makes it to a vote

To be fair: the text currently stalled in the Rada is sensible. 

Cryptocurrency becomes a special type of movable property (not a means of payment!). It is not the entire amount that is taxed, but the profit — the income from the sale minus verified acquisition costs — at the same rate of 18% + 5%. 

Tax is only payable upon conversion to fiat currency: exchanging one cryptocurrency for another is not taxed, nor is unrealised capital growth in a portfolio. Small sales amounting to no more than one minimum wage per year are exempt. Losses can be carried forward to subsequent years.

And yes, the amnesty window: assets acquired before the law came into force may be sold in the first year at a preferential rate of 5% personal income tax (plus 5% military levy) — effectively a one-off offer to come out of the shadows at 10% instead of 23%. In the first-reading version, this year is 2026. You can judge for yourselves how relevant this version is.

There is also an unpleasant technical pitfall in the draft that is worth being aware of in advance: financial results are calculated in hryvnia, including exchange rate differences. In the event of devaluation, a situation could arise where you have incurred a loss in dollars but have formally ‘made a profit’ in hryvnia — and will end up paying tax on profits that did not exist. 

Poland, for example, has resolved this issue by fixing the exchange rate on the date of each transaction. Whether a similar safeguard will appear in our final version remains to be seen.

To be frank, nobody knows when all this will come into effect. 

March 2026, as announced by the chair of the tax committee, has come and gone. The text is now promised to be finalised by August, whilst the chair of the National Securities and Stock Market Commission — the future main market regulator — cautiously mentions 2027. 

According to the MPs’ own estimates, the budget is meanwhile losing out on 14–15 billion hryvnias annually. The state, which is in desperate need of money, has for the fourth year running been unable to collect taxes that millions of people are, in principle, willing to pay — it takes a certain knack to do that.

Conclusion: legalisation is a process that should begin before the law comes into force

The situation with cryptocurrency in Ukraine is reminiscent of a classic long-running construction project in the finest Ukrainian tradition: flats in the foundation pit are sold from the very first week, with floors promised for the following year — and so it has been for the fourth year running.

It is legal to own cryptocurrency. Paying tax on it is mandatory, albeit under rules that are, to put it mildly, imperfect.

The new law promises a fairer model — a tax on profits and a grace period for coming out of the shadows — but it has not yet been passed, and it is a little too early to factor its provisions into your decisions.

“The most sensible strategy can, by and large, be broken down into three main blocks: document every transaction, settle tax issues for past periods, and be ready to take advantage of the grace period as soon as it actually opens, rather than just in public and political announcements,” says the lawyer.

The period when crypto-income was ‘invisible’ to the state is coming to an end, and not only because the tax authorities and parliament have so decided, but because that is how the new global architecture for the exchange of financial data is structured.

In this system, the advantage will go not to those who remain in the ‘grey’ zone the longest, but to those who have legalised their status at the lowest cost.