On September 10, 2021, providing clearness on the asset that was not clear before. Soon after the costs was signed into regulation, Ukraine is poised to become Bitcoin powerhouse with the amount of interest in the united states. in accordance with Chainalysis, as well as a few of the country’s politicians very own BTC. Bitcoin Magazine wished to obtain the inside scoop on Bitcoin in Ukraine, therefore we sat down with Ukrainian business owner and trader, Sergey Tron, the founder of Light Rock Management, a company that focuses on artificial cleverness, streaming processing, blockchain, logistics and power, to dive into this subject.
He spoke around and gave an excellent insight into what’s been taking place in the Bitcoin picture in the country. Below, Sergey clarifies to us at length what the new costs is focused on and what this means with regards to Bitcoin for the citizens, companies and government working in Ukraine.
Could you reveal about your experience and just why you turned your focus on Bitcoin?
I got acquainted with and afterwards engaged in technology, technology in 2016 following a visit to the best data facilities in China and European countries. I delved involved with it deeply enough. Data middle power and operation mechanisms amazed me so significantly that I decided to explore the principles of function of “non-materials,” “non-classical” entrepreneurship myself. transformed and was produced. From then on, I decided to test it out for and started developing a mining infrastructure.
Therefore, I started creating my very own “crypto history” in 2016-2017. The business enterprise attracted me being an investor using its nonengagement and freshness. It had been a true novelty in the wonderful world of technologies! Blockchain and cryptocurrency technologies seemed interesting and promising, therefore i started investing also it was the proper decision.
So how exactly does your experience in banking influence your opinion about Bitcoin? Initially, banking. However the further in to the 21st century, i made a decision to combine classic business having an “innovative” one.
I think there’s every reason to trust that, in the foreseeable future, cryptocurrency will enter a fresh advancement phase and be a usual currency, As time passes, reveal about your interaction with the politicians who participated in the development of the bill draft (Bill Draft No. 3637 “On Virtual Assets”)?
As our group represents some sort of center of competencies in the crypto space in Ukraine, we’ve provided our views to the regulators. My collaborators had several very helpful sessions and I was glad to notice that section of our suggestions have already been adopted in the ultimate version of regulations.
Is it possible to describe the mechanism and terms because of this bill ahead into force?
An industry-specific law is really a guarantee for the crypto business never to fall victim to complex misinterpretations of classical legal norms. Actually, it offers transparency of rules and protection against regulatory institution free will. A particular regulatory institution of the virtual asset market can look in Ukraine. We should combine a high degree of economic and investment freedom with a higher level of financial security. This is actually the only way the Ukrainian crypto industry may become a dynamic, civilized and competitive market.
The main goal of this law is to develop a foundation for a full-fledged functioning cryptocurrency market with transparent game rules for every player. The members of the country’s governments worldwide, in addition to legislative establishments, recognize that blockchain and digital assets will radically change most regions of human life within the next 5-10 years. Therefore, most developed countries have legalized cryptocurrency in a single form or another.
Moreover, amounting to vast amounts of investments. Nobody really wants to be left behind. What does the brand new law mean for bitcoin companies operating on the territory of Ukraine and for individuals who desire to start their business activity there?
Based on the new law, exchange, transfer along with other services linked to digital assets. Market participants, subsequently, judicial protection of these rights, receive information regarding their activities from providers, independently determine prices for undertaking cryptocurrency transactions,
These will have the chance to open bank accounts and accounts in other finance institutions to handle virtual asset transactions. Foreign crypto companies may also be in a position to register in Ukraine and earn money in our country. Generally, a special permit should be obtained for each separate kind of activity. Thus, the marketplace receives the essential game rules, ”
The law means usage of the finances of the classic market. Therefore, the main element benefit may be the expansion of the field for the crypto business and another step toward mass adoption. You should recognize that the adopted law is really a framework document, the start of the process, however, not its completion.
REGULATIONS on Virtual Assets should come into force only following the tax code has been amended on the specifics of taxation of virtual asset transactions. Experts say the procedure could take up to 1 year. Of course, it really is desirable that necessary amendments are accepted at the earliest opportunity.
Can you clarify what’s meant by this passage using real-life examples, “Virtual assets aren’t a way of payment on the territory of Ukraine and can’t be exchanged for property/goods, works or services”?
This means that you cannot go directly to the supermarket and purchase food with bitcoin. Or visit a hardware store and purchase a washing machine for this either. Not for the present time. Also, for instance, for property and any work. Based on the new law, That’s, it is possible to officially own tokens, get rid of them, buy and sell, Nevertheless, you cannot pay using them as you’ll with ordinary money.
A similar rule pertains to foreign exchange. and it’ll be possible to speak about lifting this restriction. Now crypto companies can officially provide their services to the citizens and legal entities. Currently, you can find about 100 companies in Ukraine whose activities are linked to cryptocurrencies in a single way or another, and there’s also a lot of startups of this type. Through the period from July 2019 to June 2020, $8.2 billion worth of cryptocurrencies were withdrawn from Ukraine, and $8 billion were introduced involved with it. People could have less reason to fear cryptocurrencies as some sort of “semi-legal topic,” bypassing it. We’ve a simple document regulating digital assets, legal guarantees for market participants, rules for digital asset transactions. Which means that, in the foreseeable future, the purchase and sale of tokens can be exactly the same common practice as other common forms of investment in Ukraine. The state regulatory institution will undoubtedly be created soon. It is easier to work even inside a minimal legal framework.
The blockchain and cryptocurrency business is thinking about popularizing crypto investment whenever you can, explaining to Ukrainians what it really is, how it works, why it really is profitable and safe to get and sell tokens. Even though lack of regulations didn’t scare many clients even prior to the virtual asset law introduction.
Maybe there is another boom in bitcoin and cryptocurrencies in Ukraine? This will depend on if the state and crypto associations can polish regulations, effectively implement and specify its provisions and continue steadily to legalize the market predicated on good sense and international experience. It will take a large amount of time and lots of work. Any mistake and ill-considered step, for instance, strict or nontransparent tax regulations, can stop the development of the and scare off potential investors.
The new law will not cover or regulate cryptocurrency mining at all. For instance, the Ministry of Digital Transformation believes that the token mining procedure is legal automagically and, following the adoption of laws, any claims against mining companies should disappear. It sounds good theoretically but, in real life, hawaii should create a real legal mechanism to safeguard and support mining. Police should not be in a position to “harass” honest miners unless regulations is broken. As in other cases, this can be a collaborative effort not merely for officials and MPs also for commercial sector stakeholders, in addition to blockchain enthusiasts.
Any kind of prospects for Ukraine to create bitcoin a legal currency as, for instance, in El Salvador? Does the bill draft meet all of the current needs? Ukrainian policy with regards to cryptocurrencies is a lot more balanced. The exemplory case of El Salvador was, from the exterior,
In Ukraine, It had been an open process. which is this movement that is with the capacity of qualitatively changing hawaii infrastructure. Currently, is this opportunity acknowledged by Ukraine and does it seek to reap the benefits of it?
Ukraine has repeatedly tried to enter the field of blockchain technologies. But as yet, we were holding rather pilot projects. Despite certain positive signals from the authorities, specifically, the adoption of the virtual asset law, crypto industry development issue isn’t yet one of many priorities. The state continues to cope with a lot of the issues inertly, as a complex bureaucratic mechanism. This process won’t get us far. We have to not stop there. It’s important to make sure that the virtual asset law enters into force at the earliest opportunity also to develop new norms, bylaws and concepts right away to be able to launch a full-fledged mining and cryptocurrency market at the earliest opportunity. It is necessary to determine communication between your crypto business and specialized institutions.
Our country has great potential, the capability to create probably the most favorable conditions, a paradise for crypto investors, and therefore, earn billions of UAH. You should recognize that positive changes will affect all Ukrainians without exception. Both domestic and foreign crypto companies can pay taxes. Then these funds could be committed to the development of infrastructure, medicine, social sphere, increasing pensions and social benefits for folks. It is important never to stop halfway and work with long-term goals. But this involves an obvious strategy, political will and joint work of most interested parties – not merely business and specialized associations but additionally the state. On the planet, there are lots of successful cases of cryptocurrency legalization and the attraction of international crypto giants. For example, the experience of this type of country like Kazakhstan, which includes recently been called digital Switzerland, will probably be worth paying attention to.
In your opinion, so how exactly does Ukraine intend to regulate the bitcoin market in the foreseeable future to make certain that innovation isn’t suppressed?
Investors and mining companies have become well aware of the problem and, regarding tightening the screws, they immediately proceed to a jurisdiction with an increase of attractive conditions. In the spring of 2021, the PRC government begun to systematically put pressure on miners and limit the circulation of cryptocurrencies to be able to create noncompetitive conditions because of its new project – the digital yuan. Because of this, the crypto companies, the mining pools, simply left the united states and relocated their mining capacity. We should make use of the situation and show crypto investors that Ukraine creates the very best conditions for virtual asset mining and trading, implements real mechanisms for industry protection and development. Exactly the same situation could develop in america if legislators and the White House administration go too much with taxation and control. There are lots of competitors in the market who’ve already offered unprecedented liberal conditions for investors and blockchain companies. Therefore, any “downtime” and mistakes will result in Ukraine losing its chance.
How important do you consider it is for the united states to supply nonbanking citizens with usage of nonbanking technologies that will permit them to preserve and increase their savings, thereby improving the grade of life?
First of all, In most of the populace, not forgetting the rules of the marketplace, opportunities and pitfalls. Nonetheless it may be the main task of hawaii to build up financial and digital literacy of most Ukrainians, irrespective of age and host to residence. It’s important to begin with the educational component, with the essential things.
Of course, people, despite having a small fortune, This can significantly improve the living standard in the united kingdom and start new opportunities for Ukrainians. Which is really a very realistic prospect. However, for the corresponding goal to be performed, it is important to take into account that all the components in the above list are necessary: an obvious strategy, joint work of most interested parties, a solid legislative framework,
6 Million USD). At exactly the same time, also, what does the federal government consider bitcoin mining and the usage of Ukrainian energy prospect of this?
This issue is quite closely linked to the technical features of the power system in Ukraine.
The explanation for this imbalance is apparent. This is a drop in industrial production, which, unfortunately, we’ve been witnessing since 1991. And this past year, the energy system set some sort of anti-record: Through the period from 1991 to 2021, the generation and usage of electricity fell by several half (from 300 to 143 billion kWh each year).
Domestic nuclear power plants occupy a particular place in the power system of Ukraine. Several complicated tasks have already been accumulated for coping with the nuclear-industrial complex, which resulted in low efficiency of NPP operation, on the list of main ones are: low level of electricity consumption in Ukraine, the effect of a drop in industrial production; the shortcoming to market electricity to the ENTSO-E energy system, therefore, the sale of nuclear electricity to the EU countries got blocked; reduced amount of investments in the modernization of stations; uncontrolled RES upsurge in the power system; a higher share of nuclear electricity in the full total energy balance of Ukraine (50% or even more), leading to the overflow of the essential segment of the energy system.
These features result in catastrophic consequences for nuclear power plants: A rise in the share of renewable energy sources, simultaneously with the forced upsurge in the quantity of generation of TPPs to make sure daily balancing, contrary to the drop in consumption results in the displacement of the share of nuclear power plants from the energy system (the ICUF of Ukrainian NPPs in 2020 was approximately 61%, tentative electricity underproduction by nuclear power plants in 2020 amounted to 20.84 TWh, i.e., exact carbon copy of 3 VVER-1000 units).
The question arises ways to get using this difficult situation? Industrial development isn’t a quick decision, taking into consideration the existing situation in the power system of the country, there’s an option that, inside our opinion,
An integral feature of data centers being an electrical energy consumer is really a significant quantity of consumption 24/7/365 on a linear load schedule.
The implementation of the energy supply scheme for the info processing center directly from nuclear power generation will ensure stable and mutually beneficial cooperation conditions for several parties: Nuclear power plants will receive yet another possibility to sell products at a competitive price with guaranteed and timely settlement; data centers could have a guaranteed and reliable way to obtain power supply; the power system of Ukraine will unload the essential segment of the marketplace, creating additional opportunities for daily balancing.
The construction and operation of a high-tech, multipurpose data processing center using advanced computing equipment, with the energy supply by way of a nuclear power plant, can help you implement a project with the best and fault-tolerant performance characteristics without analogs in Ukraine.
Is the country likely to make tax cuts or incentives to stimulate investors and attract capital to the united states?
As I’ve mentioned previously, Ukraine includes a more well-thought position. And much more structural. The tax rate has been discussed now,
Will Ukraine stimulate the recognition of bitcoin among citizens and explain why they want it and how to utilize it?
As much as i know, therefore, also, there’s a very strong crypto community, which is also actively mixed up in procedure for popularizing the cryptocurrency.
Can you reveal concerning the position of Ukraine regarding CoinJoin along with other tools that ensure the confidentiality of bitcoin?
The positioning of State Committee for Financial Monitoring, your body responsible for compliance, is incredibly careful in all matters linked to anonymity. For a country that’s actively fighting against terrorism and corruption, this matter is acute. But up to now, any official position is not formed yet.
Finally, concerning the prospects. Do you think you can find plans to incorporate bitcoin in to the current banking system? If that’s the case, will the bank have the ability to give a multisignature storage solution for individuals who still want to go in this manner?
Even the biggest and state-owned banks have already been already discussing these opportunities. The bank operating system of Ukraine is distinguished when you are fairly customer-friendly and customer-oriented, so banks will certainly find something to provide to the crypto business.