The Impact of Ukraine’s Lack of Crypto Regulations
Ukraine’s largest crypto exchange, Kuna, has revealed that the country has suffered significant revenue losses since 2016 due to the absence of clear regulations in the crypto market. According to a study commissioned by Kuna, Ukraine’s state budget has missed out on $52.9 billion in revenue from taxes and other crypto-related activities over the past few years.
The study, conducted in collaboration with Ukraine Economic Outlook and Blockchain Association of Ukraine, indicates that the influx of $331 billion worth of “real funds” into the crypto market since 2013 has contributed to a market capitalization increase of $1.2 trillion at the end of June 2023 and $2.2 trillion at the peak of 2022.
Ukraine has been losing nearly $7.6 billion each year without regulatory clarity for the crypto market, surpassing its military budget spending before Russia’s offensive. The lack of investment instruments, cheap electricity for crypto miners, and limited liquidity of foreign exchange instruments within Ukraine have been identified as key factors behind these missed opportunities.
The Decline in Ukraine’s Crypto Mining Market Share
The study also suggests that Ukraine could have claimed up to 16-17% of the global crypto mining market share at non-preferential prices. However, due to ongoing war with Russia, the country’s share has dropped to just 1%. In mid-September 2023, it was reported that the Economic Security Bureau of Ukraine (ESB) initiated a pretrial investigation against local crypto trading platforms suspected of tax avoidance, resulting in an estimated $80 million in lost taxes for the country.
Additionally, ESB stated that Ukrainian crypto exchanges accumulated $445 million in trading fees over the past decade, with domestic trades involving Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) amounting to a total volume of more than $55 billion from 2013 to 2023.
Hot Take: Ukraine’s Untapped Potential in Crypto
Ukraine’s failure to establish clear regulatory frameworks for the crypto market has cost the country billions in lost revenue. With potential opportunities in mining and trading fees slipping away due to lack of clarity and ongoing conflicts, it is crucial for Ukraine to address these issues and tap into its untapped potential in the crypto industry.
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