Crypto Regulations | November 1, 2021

Crypto regulations in Eastern Europe 2021

by the Crystal Compliance & Regulatory Affairs Team

Although Eastern Europe is cementing itself as one of the most forward-thinking regions when it comes to cryptocurrencies, the area has also come under the spotlight for involvement in crypto scams — both in terms of victims and the malicious actors receiving funds.

Ukraine has been leading the way from a regulatory standpoint, with Belarus also showing enthusiasm for crypto mining. Albania gave the green light to a regulatory framework back in September 2020 too, but Russia has been sending mixed signals when it comes to digital assets.

This blog looks at the current state of crypto regulations in Eastern Europe.

Brief History

After years spent in a state of limbo, Ukraine’s parliament overwhelmingly passed a law that’s designed to legalize and regulate digital assets in September 2021. However, there have been complications. Instead of signing the bill, President Volodymyr Zelensky has asked for an amendment to ensure that the National Commission on Securities and Stock Market is responsible for regulation.

Meanwhile, Belarus President Alexander Lukashenko has suggested that this growing sector could provide a boon for the country’s economy — urging citizens to mine cryptocurrencies instead of heading to neighboring countries to take up low-paid farming positions.

A great deal of uncertainty surrounds crypto ownership in Russia. Although no outright ban has been forthcoming, the country’s central bank has sought to limit activity by introducing restrictions on financial institutions.

In a potential breakthrough, President Vladimir Putin said digital assets “have the right to exist and can be used as a means of payment” during an interview with CNBC in October 2021. However, he went on to add that talk of using cryptocurrencies for trading commodities was premature.

Current Status

While Belarus has regulatory frameworks in place concerning the use of cryptocurrencies, Ukraine still needs to dot the Is and cross the Ts before protection for investors comes into force.

Attitudes may not change in Russia for some time. In the country’s parliament, the chairman of the committee on financial services has suggested that new legislation is needed to limit the cryptocurrency investments that can be made by non-accredited investors. The rationale behind this is clear: to try and protect consumers who may be tempted to gain exposure to digital assets without doing their research.

Future Outlook

China’s ongoing clampdown on cryptocurrencies and mining activities has seen Europe become one of the busiest regions when it comes to trading volumes.

But at least for now, there does seem to be a lack of consistency and cohesion when it comes to regulation in eastern parts of the continent.

A sizable number of countries within this region are part of the European Union — including Bulgaria, the Czech Republic, Poland, Estonia, Latvia, Slovenia, and Slovakia.

Regulations likely to be influenced by EU decisions

While each of these nations will be able to decide how exchanges are regulated, the European Commission’s goal is to ensure that companies that have received authorization in one EU country can operate across the bloc.

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