Last updated on January 2nd, 2018 at 12:00 am
In a surprising move, the Ukrainian government has announced that it will release its own version of New York’s BitLicense to regulate Bitcoin in the country.
Back in November 2014, the National Bank of Ukraine proihibited the use of Bitcoin in the country as a payment option in order to protect its citizens and their rights. However, the national institution’s reaction to the government’s announcement was described as “surprisingly positive”.
The country’s government supported the release of a first BitLicense draft during a meeting between the Electronic Payments Committee and the National Bank of Ukraine’s council, amongst others. Bitcoin Foundation Ukraine representative Mikhail Chobanyan presented a report titled “Project for the Development of Bitcoin in Ukraine”. Mikhail’s document proposes the creation of a self-regulating organization that should look over Bitcoin, PaySpaceMagazine.com reported.
According to the cryptocurrency expert, the rules will be designed by the Ukrainian Bitcoin community and not by the government and the self-regulating organization will issue the licenses necessary for Bitcoin-friendly businesses to operate in the country.
Also, the new regulatory system will be coordinated with the help of the country’s National Bank, as the local Bitcoin market will need to cooperate with the banks. “We are seeing banks and state agencies as partners and not as enemies,” Mikhail said during the meeting.
However, there’s a catch. This regulatory scheme implies that all licensed companies are forced to story all information surrendered by their clients. Later, this information – which includes transaction values, dates, names, account numbers and addresses – might have to be handed over to the authorities if they request the data.
Ukraine’s BitLicense makes it pretty much impossible for a company to run a Bitcoin-related business or service without the government’s approval. Nevertheless, Chobanian also stresses that the self-regulating organization will be as decentralized as possible.
But why now? Why did Ukraine feel the need to implement regulation at this time? Because, according to Chobanian, there’s no legal framework to operate a Bitcoin exchange in the country. Also, the fact that Ukrainians received around $8.5 billion in remittance money last year means there are amazing opportunities waiting for a regulated and trustworthy Bitcoin system.
This version of the BitLicense will help establish legitimate exchanges in the country, as well as enable businesses to use cryptocurrency in daily activities.
“Kiev is the de facto cryptocurrency center in Eastern Europe and the CIS [Commonwealth of Independent States]. We have the largest Bitcoin community in this region. We have the largest number of sales outlets Bitcoin per capita in the world,” Chobanian says. “But big business and investors are waiting for clear ‘rules of the game’ and for the development of basic infrastructure in the form of stock exchanges, payment service providers and integration with the banks.”