Digital Assets and Their Legal Regulation in Ukraine

Digital assets are gaining popularity every year. Such interest to digitalization is, first of all, related to the blockchain technology, which has become an alternative for money transfers. Consensus building algorithms that are being applied in the crypto industry allow using digital assets without involving the government sector and help to execute decentralized transactions.

     Regulation of the cryptocurrency market in different countries
     The attitude to digital assets varies from one country to another: from full permission and use in international transactions to total ban for circulation even for personal purposes. Statistics on the use of cryptocurrencies in different countries are given below.
      Let’s take a look at the countries where the blockchain is applied, and the government makes efforts to create a complete legal framework for using cryptocurrencies in economy. For example, in the USA, they are treated as valuable assets. Measures on taxation of cryptocurrency transfers and transactions were taken a few years ago. Cryptocurrencies have been adopted as a generally accepted payment method in Japan since 2016. A consumption tax on cryptocurrency sell transactions has not been imposed since 2017. Canada has situation similar to the USA. Cryptocurrencies have been legalized and have received the private currency status in Germany.
In Great Britain, cryptocurrencies are treated as a foreign currency.
Transactions with cryptocurrencies are considered a barter arrangement in Australia.
Meanwhile a cryptocurrency is a simple currency in Swiss.
     The countries where cryptocurrencies are forbidden are as follows:
     • Iceland;
     • Romania;
     • Ecuador;
     • Taiwan;
     • Vietnam.
     Legalization of cryptocurrencies in Ukraine and their legal regulation
     It is known that the Ministry of Digital Transformation of Ukraine, along with deputies of the Verkhovna Rada of Ukraine and entrepreneurs, decided to create the memorandum in order to give legal status to cryptocurrencies in Ukraine.
     The blockchain is expected to be used in state registries and government institutions. This system will allow fully excluding data falsification and corporate raids. First, the government has to develop the legal base. The problem lies in a property of the blockchain when it comes to the distributed storage of data as it is forbidden by the current legislation of Ukraine. Multiple servers must be used to build infrastructure — this is what many cryptocurrency experts in the country hope for.
     Measures for promotion and legalization of digital assets in Ukraine
     September 24 was marked by the opening of the III Kharkiv International Legal Forum. During the event, the following topics were discussed: cybersecurity and updates of legislation; digital assets and their impact on the future; development of economy on the basis of the blockchain; European integration; security threats, etc. On September 25 and 26, forum participants made detailed statements about the prospects of the blockchain technology development for the market of information resources and services in Ukraine.
     New blockchain developments in Ukraine
     Speaking about recent blockchain developments in Ukraine, it is important to mention two  interesting moments.
     The first one is a test for determining whether a blockchain token is a digital asset. The development involves the approach that allows easily determining the level of correspondence of a blockchain token to a digital asset.
     Determining whether a blockchain token is a digital asset means the fulfillment of a condition for the correspondence to digital asset characteristics in the field of economy. In simple terms, the principle of equivalence of categories consists in the equivalence of one category with another. This is what determines the level of correspondence to an asset. If a blockchain token does not correspond to at least one category, this token is not considered a digital asset. The second one is a definition of the term “digital asset”. Digital asset is an information resource derivative of the right to a value and circulating in the distributed ledger in the form of a unique identifier.
     Digital assets as an object of legal regulation
     The recent data received as a result of conducted comparative analysis of crypto currencies and digital assets shows a significant difference between the two terms when it comes to functioning and the purpose of use. The exhaustive comparison can be made based on the number of characteristics.
     Characteristics of digital assets:
     • properties of an information service;
     • right to a value;
     • circulation in a blockchain network ledger;
     • electronic identifier.
     The main characteristic that distinguishes the two notions is the backing of a digital asset by real assets. In addition, a legal aspect has to be taken into account, which ensures proper security for owners of digital assets that owners of cryptocurrencies and tokens do not have.
     Conclusion
     In summary, we can conclude that use of digital assets will have a positive impact on the country’s economy, bring additional investments and improve security of confidential data. Prospects for the development of digital assets in countries of Eastern Europe as a whole, and particularly in Ukraine, are pretty high; and the government makes every effort in order to increase the role of digital assets in economy and in the field of information services.