Ukraine’s failure to effectively regulate the crypto sector has had a significant financial impact on the nation. According to a study conducted by Ukraine Economic Outlook in collaboration with the crypto exchange Kuna and the Blockchain Association of Ukraine, the country has lost nearly $49 billion between 2016 and 2022.
The Potential Tax Revenue
The authors of the report estimate that Ukraine could have generated approximately $10.4 billion in tax revenue by implementing levies on crypto trading. They emphasize that this figure corresponds to an annual loss ranging from $1.5 billion to $7 billion. However, they acknowledge that this potential tax income was not evenly distributed and that the bulk of the losses occurred during the crypto bull market years of 2017 and 2020.
Calculating the Losses
The study’s authors arrived at these figures by analyzing Ukrainian crypto trading data, domestic mining pool income, and stablecoin transaction information. They also noted that taxing crypto miners alone could have contributed $7 billion to the Ukrainian Treasury between 2016 and 2022.
Recognizing the regulatory gap, Ukrainian politicians, including Kyiv’s Deputy Prime Minister for Innovation, Education, Science, and Technology Mykhailo Fedorov, are taking steps to address the issue. Fedorov emphasized the need to bring the crypto sector “out of the shadows” and proposed a tax rate of 5% for individual citizens and 18% for companies. “It is time to bring the crypto sector out of the shadows,” he wrote on Facebook.
Past attempts to tax crypto-related activities in Ukraine have faced obstacles. While a bill was signed off in early 2022 to impose taxes on crypto profits, it encountered a last-minute hurdle and was ultimately derailed by the outbreak of war. Nevertheless, senior politicians have recently expressed their intention to align Ukraine’s crypto regulation with the European Union.
