Ukrainian Law May Separate Mining from Cryptocurrencies

Economy & Regulation

Ukrainian legislators should separate the regulation of crypto mining from the legal status of cryptocurrencies. The new approach was proposed by the chairman of an important parliamentary committee who criticized law enforcement agencies for cracking down on crypto miners. Police confiscated mining equipment in a series of raids this week. Authorities claim that coins have been used to finance pro-Russian separatists.

Also read: Another Post-Soviet Jurisdiction Welcomes Crypto Miners

Just Calculation…

Ukrainian deputy Olexandr Danchenko, head of the Committee for Informatization and Communications in the Rada, suggested that cryptocurrencies and crypto mining should be regulated separately. He condemned Ukraine’s security services for pressuring miners. “Mining is just calculation”, the MP said during a meeting with digital market experts, business executives and government officials in Kiev.

Ukrainian Law May Separate Mining from Cryptocurrencies

“Ukraine’s share of the global cryptocurrency mining market has shrunk to just 3%”, Danchenko noted, quoted by Interfax-Ukraine. “Separate mining from cryptocurrencies”, he appealed during the consultations. Ukraine’s Deputy Prime Minister and Minister of Economic Development Stepan Kubiv agreed that the issue could be resolved by drafting a relevant bill.

Olexandr Danchenko warned that many Ukrainian miners are leaving the country because of the crackdown by authorities. “Canada is creating optimal conditions for mining and our guys invest their money there”, he said.

Under Pressure

Raids on several mining facilities in Kiev, Kiev Oblast (the adjacent region) and Cherkasy Oblast were conducted on Thursday. 400 mining rigs have been confiscated during a search in the PJSC Kvazar plant in the capital. Police have seized more than a thousand graphics cards, 1,500 hard disks, 500 motherboards and several laptops.

According to Ukrainian authorities, proceeds from the mining operations have been used to finance separatist activities in the Eastern Ukrainian regions of Donetsk and Lugansk, Unian reported. Documents with Russian bank details found during the raids proved financial transfers to the territories controlled by the pro-Russian forces. Funds were stored in Qiwi and Yandex wallets.

Ukrainian Law May Separate Mining from Cryptocurrencies

“Currency that is officially banned in Ukraine has been used to buy military equipment, weapons and ammunition for the illegal armed groups in LPR and DPR”, Ukraine’s Deputy Prosecutor General Anatoliy Matios said during a briefing in Kiev. Investigators have identified individuals involved in the mining operations. It is not clear why they have set up their farms in Ukraine, when the restive regions border Russia and transferring funds or equipment for the separatists would have been much easier from Russian territory.

Separate Tracks

If Ukraine decides to address mining separately, some crypto regulations may be adopted sooner than expected. Similar suggestions have been made in Russia, where legalizing cryptocurrencies has divided institutions but most officials agree that crypto mining can be legalized and regulated. Even Russia’s Central Bank, that has opposed the legalization of cryptocurrencies like bitcoin, recently announced it would allow crypto mining.

Two bills to regulate cryptocurrencies and mining have been advancing through commissions in the Rada since October last year. However, no significant progress has been reported in 2018. The new legislation may introduce incentives for miners, including lower electricity rates.

Danchenko’s warning about the exodus of miners from Ukraine comes at a time when other authorities in the post-Soviet space are trying hard to attract miners. Belarus will soon complete the process of legalizing the entire crypto sector with tax exemptions for mining companies. Countries like Uzbekistan offer cheap electricity and other incentives.

Do you think that regulating crypto mining can be a first step towards legalizing cryptocurrencies? Tell us in the comments section below.


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