Journal of Economics and Economic Education Research (Print ISSN: 1533-3590; Online ISSN: 1533-3604)

Reviews: 2020 Vol: 21 Issue: 6

Legal and Accounting Dimensions of Cryptocurrency In Ukraine

Valentyna Kostyuchenko, Kyiv National University of Trade and Economics

Alyona Malinovskaya, Kyiv National University of Trade and Economics

Anastasiia Mamonova, Kyiv National University of Trade and Economics


The rapid development of digital technologies affects the national and international economy. It has been 11 years since the launch of the innovative Bitcoin payment system, the first cryptocurrency. Despite certain risks of use the number of e-wallet owners is constantly growing. Each country has a different perception of the spread of this innovation. The Government of Ukraine is no exception and showing a positive attitude to the cryptocurrency market. At the moment there is no legal regulation of cryptocurrencies in Ukraine despite the fact that a number of bills were submitted for review. Due to the lack of legal framework the order of reflection in the accounting of cryptocurrency is complicated.


Cryptocurrency, Ukraine Cryptocurrency E-Hryvnia, Cryptocurrency Exchange, Legal Regulation Of Cryptocurrency, Cryptocurrency Accounting.

JEL Classifications

K39; M41; O17


Nowadays society is actively using cryptocurrency based on the progressive development of economic and technological spheres all over the world, despite the number of presented risks. The most popular cryptocurrency is Bitcoin. The other types of cryptocurrencies were developed on its basis.

The creation of different cryptocurrencies types is based on the use of Blockchain technology. This technological development can be actively used and implemented in business processes. It allows avoiding an intervention of intermediaries reduces the cost of contracts and eliminates the fact of fraud.

Methodology and Data

Millions of active investors around the world trade Bitcoin and other cryptocurrencies on more than 100 exchanges. The cryptocurrency market is a unique platform for studying and researching approaches to the regulation of cryptocurrency transactions and the pricing process. There are a number of cryptocurrency exchanges in Ukraine and the most popular are presented in Table 1 (, 2020).

Table 1 The Most Popular Cryptocurrency Exchanges in Ukraine in November 2020
Cryptocurrency exchange Trading volume in 24 hours
1 Binance $1 260 676 385
2 Huobi $699 527 521
3 Exmo $699 098 419
4 OKEx $675 116 817
5 Kucoin $113 581 446

In terms of cryptocurrency trading in the world Ukraine entered the top 5 countries (September, 2020) and is recognized as country with a high level of digital education among the population (, 2020).

According to the blockchain company The Chainalysis, Ukraine is a leader in the use of Bitcoin. The most popular types of cryptocurrency in Ukraine are shown in Table 2 (, 2020).

Table 2 Top Cryptocurrencies by Market Capitalization in Ukraine as of November 23, 2020
The name of the cryptocurrency Market capitalization, USD
1 Bitcoin 339541384828,00
2 Ethereum 67589496723,00
3 XRP 25595987612,00
4 Tether 18507472492,00
5 Bitcoin Cash 5900820205,00

In 2018 the National Bank of Ukraine (NBU) in cooperation with technology companies launched a pilot project of its own cryptocurrency E-hryvnia. During the trial period NBU issued a limited amount of E-hryvnia for transactions (Figure 1).

Figure 1 Number of Operations Carried out During the Pilot Project Using E-Hryvnia December 15, 2018

Now the project is in test mode, and its implementation requires significant investment (, 2020).

Results and Discussion

Progressive development and spread of the use of cryptocurrencies in Ukraine requires their legislative regulation. For the last few years a number of bills have been submitted to the Verkhovna Rada: Bill 7183-1 “On Stimulating the Cryptocurrency Market and Their Derivatives in Ukraine” (2017); two bill drafts № 9083 and №9083 -1 “On Amendments to the Tax Code of Ukraine Concerning the Taxation of Transactions with Virtual Currencies” (2018); bill draft №3637 of 11.06.2020 “On virtual assets” (, 2020). Unfortunately, none of them was adopted.

An important event in the recognition of cryptocurrency and transactions with it was the adoption of the Law of Ukraine "On Prevention and Counteraction to Legalization (Laundering) of Proceeds from Crime, Terrorist Financing and Financing the Proliferation of Weapons of Mass Destruction" (2020). The main goal of this law is to prevent money laundering and terrorist financing. The Law was the first to introduce the concept of "virtual asset" as a digital expression of value that can be traded in digital format or transferred and that can be used for payment or investment purposes; to set possible types of transactions with cryptocurrencies for identification of users in case of transactions for certain amounts; the to define the regulator of operations with virtual assets (the Ministry of Digital Transformation). The law legalized the cryptocurrency business and provided access to the banking system to representatives of the crypto industry (cryptocurrencies, exchangers and others). (, 2020).

There are remaining problems in the field of cryptocurrency circulation like lack of legal regulation of relations arising in this field; the absence of mechanisms for taxation of income from operations with cryptocurrencies; lack of regulation of professional participants in cryptocurrency markets; lack of cryptocurrency accounting and transactions with them.

The lack of legal regulation of cryptocurrency circulation makes accounting of such objects difficult. However, the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (1996) requires the application of IFRS for companies of public interest and allows companies to determine the appropriateness of applying IFRS for financial reporting. This is the basis for accounting for cryptocurrencies in possession. The IASB has clarified the accounting for such assets and recommends that they be accounted for as an intangible asset (Holdings of Cryptocurrencies, 2019) and to be recognized as inventories in case of their sale.


Cryptocurrencies have become widespread in Ukraine. Cryptocurrency exchanges and own cryptocurrency E-hryvnia have been created and are functioning. There is no legal regulation of cryptocurrency circulation in Ukraine, although in recent years there have been attempts at the legislative level to adopt a number of laws. In order to strengthen control over the possibility of involving cryptocurrencies in the financing of terrorism and the proliferation of weapons of mass destruction in Ukraine a regulator on cryptocurrency transactions was appointed and a relevant law was adopted. The procedure for accounting cryptocurrencies is not regulated. Exceptions are public interest entities that are required to apply IFRS.


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