Looks like Bitcoin regulation is around the corner in Ukraine as the government is expected to release its own BitLicense draft. Though initial reception has been described as “surprisingly positive” by the country’s Central Bank and financial sector, those who belong to the puritanical group of Bitcoin supporters have started seeing red in it.
Ukraine’s BitLicense draft in its current form would create a self-regulating organization (SRO) that would issue licenses to businesses dealing in cryptocurrencies. Founder of the Kuna Bitcoin Agency and the Bitcoin Embassy in Ukraine says that the key difference from New York or any other regulation proposal in the world is who issues the license.
Recently, he presented a report titled “Project for the Development of Bitcoin in Ukraine” where he proposed a self-regulating organization in the face of Bitcoin Foundation Ukraine. He says that the rules will be created by the Bitcoin community itself and not by the government; they will be coordinated with the NBU, as banks to work with the exchange are required.
Nonetheless, under this regulatory scheme, the licensee has an obligation to store information on all transactions — amounts, dates, names, account numbers, and addresses — which should be handed over to the authorities upon request. There are some noteworthy clauses require the licensee that are being discussed here.
For instance, to have an internal control system preventing money laundering, in accordance with all existing laws; and to undergo regular audits by the SRO, companies need the license. Similarly, to appoint a certified specialist as a cyber-security director, responsible for security software and auditing, license is needed.
At the same time Chobanian stressed that no party will have a monopolistic vote right and the Bitcoin community in the Ukraine will make the SRO as decentralized as possible in this centralized world. Answering to the question why Ukraine needed a BitLicense, he said that there is no legal framework to operate an exchange.
Bitcoin Regulation to Generate Confidence among Investors
Thus, according to him this marginalizes Bitcoin users in the country and creates limitations when converting to fiat. Additionally, the BitLicense will not only establish legitimate exchanges in the country but most importantly, enable businesses to use crypto in day to day business activities.
He also makes it clear that he had to lead the legal status development in Ukraine and there is a strong misunderstanding of technology among the government and banks. Also, for them it’s easier to ban Bitcoin use rather than spend time understanding and developing. That is why the Bitcoin community is taking the initiative.
BitLicense kind of regulation will create conditions that would be beneficial to all parties that ultimately will lead to new investments in Ukraine.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org