Regulation of cryptocurrency use in Ukraine and worldwide

Cryptocurrencies present rapidly evolving and complex challenges for legal and regulatory systems worldwide. This paper offers a comparative analysis of regulatory frameworks in five jurisdictions: the United States, the European Union, Japan, China, and Ukraine. A systematic assessment examines how crypto-assets are classified as virtual assets, financial instruments, or payment means, using analytical, synthetic, comparative-legal, and normative-legal methodologies. The Bank for International Settlements sees digital currencies as decentralized assets without state obligations, and the European Central Bank treats them as e-money. National approaches vary: the United States addresses security tokens through the Securities and Exchange Commission and commodity tokens via the Commodity Futures Trading Commission; Japan classifies cryptocurrencies as property under its Payment Services Act; China enforces a ban on transactions and mining activities with criminal penalties; and the EU’s Markets in Crypto-Assets Regulation unifies definitions and licensing requirements. Ukraine’s Virtual Assets Law defines virtual assets as electronic rights but prohibits their use as legal tender, reflecting a cautious approach to safeguard monetary sovereignty. We propose aligning Ukrainian legislation with global standards by adopting MiCA’s asset taxonomy; enforcing robust Know Your Customer (KYC) and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) protocols; licensing virtual asset service providers; differentiating regimes for utility, payment, and investment tokens; and establishing a transitional tax regime. These recommendations aim to mitigate systemic risks, protect stakeholders, and foster the sustainable development of Ukraine’s digital economy.