The Ukrainian government said Wednesday it is losing potentially tens of millions in tax revenue due to the non-regulated status of crypto exchanges operating within the country.
Over the past decade, crypto exchanges are said to have cost the state budget an estimated 3 billion Ukrainian hryvnia ($80.9 million) in uncollected taxes, according to a statement.
An analysis by Ukraine’s Bureau of Economic Security (BEB) found that trades involving bitcoin (BTC), ether (ETH) and tether (USDT) reached a total volume of over $55 billion from 2013 to 2023 on Ukrainian-based exchanges.
With trading fees typically ranging between 0.1% and 1.5%, the BEB estimates that these exchanges have amassed roughly $445.5 million over that same period.
As there are currently no specific regulations in place governing the taxation of these transactions, the exchanges are not obligated to pay taxes on the revenue accrued from digital assets in Ukraine.
Read more: Ukraine fund spends $54M of crypto donations on military gear
It is unclear how the bureau arrived at its estimates, given the lack of tax framework in place for digital assets. BEB did not immediately return a request for comment.
In February 2022, Ukraine’s Verkhovna Rada adopted a law governing and clarifying digital assets, but it will only come into effect once amendments have been made to Ukraine’s tax code to include provisions for the taxation of digital asset transactions.
So far, those regulations have not been put in place, leading to a continual loss of potential tax revenue for the state, BEB said.
“There are different points of view on how these transactions should be taxed,” Andriy Pashchuk, BEB’s deputy director, said. “But it is obvious that while the issue drags on, the state continues to lose tens of millions in taxes every month.”
The director also said operations involving crypto can be used to circumvent sanctions, withdraw funds abroad, conduct illegal gambling businesses and commit criminal offenses.
Ukraine itself has been the beneficiary of crypto donations from the community seeking to aid its war efforts, following Russia’s ongoing invasion of its territory, which began in February 2022.
As of July 20, Ukraine has received $225 million worth of crypto donations, with the majority of it now going towards humanitarian aid, intelligence firm Crystal Blockchain recently reported.
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