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Ukraine Probes Local Crypto Exchanges for Tax Evasion

Ukraine Probes Local Crypto Exchanges for Tax Evasion

Ukraine’s Economic Security Bureau (ESB) is currently investigating local cryptocurrency exchanges. The reason behind this investigation is the discovery that unregulated exchanges in the country have resulted in a loss of over $80 million in uncollected taxes.

Previously, Ukrainian regulators approved a tax of 18% on crypto gains starting in 2024. At the same time, Kyiv has been working on aligning its cryptocurrency regulations with the European Union (EU) to implement regulatory measures that are in line with the EU’s Markets in Crypto-Assets (MiCA) legislation.

Ukraine’s Probe into Crypto Exchanges Intensifies

In an interview with Forbes Ukraine, Andriy Pashchuk, the head of Ukraine’s Economic Security Bureau (ESB), stated that the investigation is focused on trading platforms where locals are beneficiaries. He revealed that ESB analysts are using data services such as Chainalysis and Crystal Blockchain to carefully track cryptocurrency transactions.

In addition to on-chain data, the ESB is incorporating open-source intelligence (OSINT) insights to assess the overall cryptocurrency turnover within digital wallets on Ukrainian exchanges.

Pashchuk mentioned that the bureau is conducting a pretrial investigation against entities involved in the local cryptocurrency market, but he did not provide specific details about the current stage of the investigation.

In August 2023, the Economic Security Bureau (ESB) released an official statement revealing that Ukrainian crypto exchanges had collected around $445 million in trading fees over the past decade. According to the bureau’s calculations, transactions involving Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) within the domestic market amounted to over $55 billion from 2013 to 2023.

Ukraine’s Crypto Regulatory Framework

Andriy Pashchuk, deputy director of the Economic Security Bureau, highlighted that there are different perspectives on how these transactions should be taxed, and the bureau will follow the provisions adopted by the deputies. He emphasized that while the issue remains unresolved, the state continues to face significant monthly tax revenue losses.

In March 2022, Ukrainian President Volodymyr Zelenskyy signed the “On Virtual Assets” legislation, establishing a regulatory framework for cryptocurrencies. At the same time, the government expressed its commitment to amending Ukraine’s tax and civil codes to align with this newly established legal framework.

Many cryptocurrency users in Ukraine, discussing the matter on Telegram, have expressed concerns about whether they would be required to retroactively pay taxes for transactions conducted over the past decade. Some individuals have pointed out the government’s delay in implementing regulations despite the law being passed in 2022. This uncertainty has led to widespread questioning and confusion among the crypto community in Ukraine.