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4.81 Neutral Environment
The economic instability that occurred in Ukraine in 2014 after the Euromaidan and the change of administration led to the popularization of cryptocurrencies among the population. According to analysts, many citizens in Ukraine began to use Bitcoin as a way to avoid inflation and instability of the national currency, which has lost about 80% of its value since 2014. Also in 2014, almost 5,000 ATMs in the country began to offer the possibility to buy Bitcoins for cash, and in 2016, one of the Ukrainian cryptocurrency services announced a 5-fold increase in demand. In 2016, the Ukrainian stock exchange launched trading in futures for Bitcoin contracts. The size of the Ukrainian Bitcoin cryptocurrency market is estimated at $2.5 billion annually, according to analysts.
The response of the National Bank of Ukraine to the expansion of the country's crypto-market in 2014 was a statement, in which cryptocurrencies were defined as "money substitutes", and users were cautioned against risks associated with the use of funds that were not entered by the National Bank of Ukraine into the Register of Payment Systems. Later, the position of the National Bank regarding the blockchain technologies softened.

The relationships of the blockchain community of Ukraine with regulators over the past four years have ranged from cooperation to conflicts. The year 2015 was marked by searches in the offices and apartments of representatives of the IT and blockchain industry (incl. the searches in Forklog). In 2017, the Security Service of Ukraine began to perform targeted raids on mining farms, although mining in Ukraine is not legally prohibited. But now the environment for crypto business in Ukraine is more friendly.

Since 2016, Ukraine has actively developed state initiatives to introduce the blockchain into public administration in various spheres.

The legal status of cryptocurrencies remains undefined up to the present day. The need for the regulation of the cryptocurrency market has repeatedly been emphasized by various representatives of government agencies and activists of the blockchain community. Nowadays, in the Verkhovna Rada of Ukraine (the Parliament) considers three different bill concerning the cryptocurrencies: 1. Bill on the Turnover of Cryptocurrencies in Ukraine. 2. Bill on the Promotion of the Market for Cryptocurrencies and Their Derivatives in Ukraine. 3. Bill on Amendments to the Tax Code of Ukraine (regarding the promotion of the market for cryptocurrencies and their derivatives in Ukraine).
Neutral Political Environment
6.0 points
Issues associated with the development of blockchain technologies and the regulation of the cryptocurrency market are of significant political importance in Ukraine due to the involvement of a fairly large part of the population in the crypto-economy and IT as a whole. The Ukrainian political elites have high hopes for the cryptocurrency and blockchain business as an opportunity to develop the economy and demonstrate a positive attitude to the distributed ledger technology; however, there is certain suspicion towards the development of the cryptocurrency market. Blockchain technologies have already been introduced in several governance areas. At the same time, the regulation of the cryptocurrency market remains an open issue and is still a highly relevant matter; statements about the need to adopt special legislation in the near future are increasingly frequent. At the same time, it is not yet clear what exactly it will look like; in parallel, work is underway on several bills.
Not Enabling Legal Environment
1.25 points
Regulatory Convergence
At the moment, there is no special legislation regulating blockchain projects and the circulation of cryptocurrencies in Ukraine. Cryptocurrencies have the special attention of Verkhovna Rada, the National Securities and Stock Market Commission of Ukraine and the National Bank. To avoid divergence and harmonize the positions of official agencies bills have been developed by an interdepartmental working group consisting of representatives of state bodies. Due to the lack of a clear position of regulators on the issue, it is difficult to speak about the divergence.

Definiteness of Legal Regulation
At the moment, there is no special legislation regulating blockchain projects and the circulation of cryptocurrencies in Ukraine. Moreover, there are no statements by the authorities indicating that general legislation can be applied to relationships associated with cryptocurrencies by analogy. In fact, the entire crypto-industry remains unregulated.

Currently, three bills related to cryptocurrencies are under consideration in the Verkhovna Rada. An interdepartmental working group is working on a single bill.

Stability of Legal Regulation
The current situation with the legal regulation of cryptocurrencies in Ukraine can be characterized as unstable. Several bills on cryptocurrencies have been submitted to the Verkhovna Rada, the working group is developing a unified bill. The discussion of the bills is scheduled for late 2018 – early 2019. At the moment it is difficult to predict which of the bills will eventually be adopted. The bills under review are actively criticized by other government agencies and the blockchain community.

Adequacy of Legal Regulation
The current legal situation with cryptocurrencies creates a rather maladapted environment for the crypto-industry. Law-enforcers' actions regarding mining and blockchain enthusiasts can be characterized as aggressive; the existing legal situation does not contribute to the promotion of the crypto-industry. At the same time, at the moment, state bodies are developing special legislation to regulate cryptocurrency-related and blockchain projects. In general, the authorities are very positive about the potential of the blockchain and cryptocurrencies, so in the future the legislation may become more adequate.
Situation with the Rule of Law
Ukraine has low indicators of the rule of law, ranking 77th in the world among 113 countries. The conditions of the legal regulation of blockchain and cryptocurrencies are not enabling, and since the values of the sub-criterion of the rule of law are low (0.50), the amount of the difference between weighted (multiplied by Rule of Law Index score) and unweighted assessments are significant.
Rather Enabling Infrastructure Environment
7.17 points
Ukraine ranks 82th among 193 countries in the UN Global E-Government Development Index. Ukraine also has medium business environment development indicators ranking 76th in the world.