Ukraine’s Economic Security Bureau (ESB) is investigating local cryptocurrency exchanges. This action comes in response to the bureau’s discovery that unregulated exchanges operating in the country have led to a loss of 3 billion Ukrainian hryvnia (over $80 million) in uncollected taxes.

Earlier, Ukrainian regulators voted to tax crypto gains 18% as of 2024. Meanwhile, Kyiv has been working to align its cryptocurrency regulations with the European Union (EU) in recent weeks to introduce regulatory measures that adhere to the principles laid out in the EU’s Markets in Crypto-Assets (MiCA) legislation.

Ukraine Intensifies Probe Into Crypto Exchanges

Andriy Pashchuk, the head of Ukraine’s Economic Security Bureau (ESB), stated in an interview with Forbes Ukraine that the investigation focuses on trading platforms with locals as beneficiaries. He disclosed that ESB analysts use data services like Chainalysis and Crystal Blockchain to track cryptocurrency transactions meticulously.

In addition to on-chain data, the ESB incorporates open-source intelligence (OSINT) insights to assess the overall cryptocurrency turnover within digital wallets on Ukrainian exchanges.

Pashchuk mentioned that the bureau is conducting a pretrial investigation against entities participating in the local cryptocurrency market. However, he did not provide specific details regarding the current stage of the pretrial investigation.

In August 2023, the Economic Security Bureau (ESB) released an official statement indicating that Ukrainian crypto exchanges had accumulated approximately $445 million in trading fees over the past decade. According to the bureau’s calculations, transactions involving Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) within the domestic market totaled more than $55 billion from 2013 to 2023.

Ukraine’s Crypto Regulatory Framework

Andriy Pashchuk, deputy director of the Economic Security Bureau, pointed out that there are different points of view on how these transactions should be taxed, and the bureau will act under the provisions adopted by the deputies. He emphasized that while the issue remains unresolved, the state continues to experience significant monthly tax revenue losses.

In March 2022, Ukrainian President Volodymyr Zelenskyy signed the “On Virtual Assets” legislation, establishing a regulatory framework for cryptocurrencies. Concurrently, the government expressed its commitment to revising Ukraine’s tax and civil codes to align with this newly established legal framework.

A significant number of cryptocurrency users in Ukraine, discussing the matter on Telegram, raised concerns about whether they would be obligated to pay taxes for transactions conducted over the past decade retroactively. Some individuals highlighted the government’s delay in implementing regulations despite the law’s passage in 2022. This uncertainty has led to widespread questioning and confusion among the crypto community in Ukraine.