🧭 4 steps to start working with crypto assets in Ukraine

The Ukrainian market of crypto-assets has been actively developing for more than five years, but until recently it functioned without a proper legal foundation.

Since 2017, the Verkhovna Rada has been actively working on the draft law “On Virtual Assets”, which was adopted in the winter of 2022. Since then, crypto assets in Ukraine have become official.

The GEO Pay team highlighted 4 main steps to start using digital assets safely, and also gave effective advice on how to start your journey in the world of crypto.

How to safely buy crypto assets in Ukraine

Crypto exchanges are the safest and fastest way to buy crypto in Ukraine. They are industry-reputable, easy to use, and don’t require deep crypto knowledge to get started. This is a universal path for those who want to try to buy, sell or exchange an asset, but don’t know where to start.

Advice from GEO Pay : In order to choose the right exchange, you need to look at its reputation in the industry, compare the number of users, and analyze what is written about a specific platform. Our recommendation is to start your journey with Binance , WhiteBit or Kuna .

All you need to start working with the exchange is to open an account, go through verification and top up your balance. There are different ways to top up the balance of the exchange – using a card or through a fiat gateway. One of the most famous and safest gateways is the Ukrainian GEO Pay service.

GEO Pay is a convenient multi-currency service that combines p2p payments and financial operations for depositing/withdrawing fiat funds and their subsequent exchange for crypto-assets or vice versa on partner exchanges.

How to buy crypto assets with GEO Pay

1. Register an account on the geo-pay.net website

2. Pass KYC verification to increase the security level of your account and ensure the safety of funds

3. Top up the GEO Pay balance from the card of any Ukrainian bank using one of 6 payment systems

4. In the side tab of the “Members” menu, select any exchange and open an account on this platform

5. Top up the balance of the exchange through GEO Pay with a low fee

6. In the “Buy” tab on the exchange, select the desired crypto-asset and make payment from the balance of the exchange.

Which asset to start with

Take your time – there are a lot of cryptoassets. Today, according to the site for tracking the value of cryptoassets CoinMarketCap, their number is 20,246. And not all of them have a bright future.

You should not listen to “experts” : you need to conduct an independent analysis and understand the subtleties yourself. Learn about specific coins and track their market position.

If there is no time to understand or lack of knowledge at this stage, choose the most popular assets by capitalization and reputation. Currently, Bitcoin and Ethereum are considered the most reliable assets.

How to interact with crypto

You are wonderful! Now you have the purchased crypto-asset on your balance — you can keep it, sell it, withdraw your funds to your own bank card or send it to other users.

In order to continue operating your assets — keeping old ones and buying new ones — you don’t need anything other than your stock exchange account. This is the easiest and one of the safest options for storing your digital assets. An account on the stock exchange is actually a wallet.

But if you want more control over your own assets, another option could be a crypto wallet. The main advantage of wallets is that developers do not have full access to the user’s coins. Payments from such a service cannot be made without the joint participation of the client and the company. This increases the level of protection. On the other hand, the loss of the secret phrase will be fatal, in which case you can forget about cryptocurrency.

Advice from GEO Pay : The wallet is more reliable than the exchange and allows the user to keep full control over their assets. For example, if the exchange goes bankrupt, you will lose everything you have stored in its accounts. But in case of bankruptcy of the wallet, you will be able to restore your balance on another platform, having a secret phrase of 12 words.

List of recommended crypto wallets:

— Trust Wallet
— MetaMask (the most popular wallet for interaction with DeFi services)
— Ledger/Trezor (hardware wallets)

Risks and safety

First of all, a beginner in the crypto world should carefully choose a place to store purchased assets. You can store crypto-assets in local wallets located on the computer of their owner or on specialized mini-devices (for example, hardware wallets produced by Trezor, KeepKey and Ledger), as well as on online services.

Two-factor authentication and secure passphrase storage can significantly increase the security of your assets. The best option would be to save the phrase not on electronic media, but to write it down on a piece of paper and keep it in a safe place.

In addition to technical risks, there are risks related to the “human factor”. To protect your cryptocurrency investments from criminal interference, use long and complex passwords and carefully verify your exchange address (or other service where you store your assets) when logging in.

If you notice suspicious activity (for example, an email notification of account access that you did not do), contact the exchange’s support immediately so that their representatives can take steps to ensure the proper security of your wallet.

Legislation and regulation

The most important issue when starting to work with crypto-assets is their legal foundation and status in Ukraine.

On March 17, 2022, the President of Ukraine Volodymyr Zelenskyi signed the Law of Ukraine “On Virtual Assets”, which was adopted by the Verkhovna Rada of Ukraine on February 17. It creates the conditions for launching a legal virtual assets market in Ukraine. The signing of this law legalized cryptocurrency in Ukraine, its trade, exchangers, exchanges, and more.

What has changed with the adoption of this law?

• Cryptocurrency now has a legal status;
• Financial monitoring will be carried out in the field of virtual assets;
• Ukrainian crypto-investors can declare their profits;
• Users can legally exchange, buy and sell cryptocurrency.

However, the recently adopted law will enter into force only after the Tax Code is amended. These changes will determine the specifics of taxation of financial transactions with virtual assets. The relevant bill is already being considered in the Verkhovna Rada.

Is cryptocurrency taxable?

Draft Law No. 2461, which establishes taxation rules for the sale of crypto-assets, including crypto-assets, has been submitted to the Verkhovna Rada. The document takes into account cases of withdrawal of assets in fiat. At the same time, the authors of the draft law note that the Ukrainian market of virtual assets cannot develop normally due to the lack of certainty of the legal status of electronic currencies and tokens.

The document also states that the profit obtained from transactions with digital assets is defined as the positive difference between the revenue from the sale and the costs from mining or buying the assets. The draft law establishes a tax on such income at the rate of 18% for organizations and 5% for individuals. Transactions on the sale of crypto-assets are not subject to VAT.

However, the law does not say anything about the application of a simplified taxation system to such operations, but at the moment, crypto-asset trading is not among the prohibited activities for single tax payers.