On-shore VASP in Ukraine
Locally-incorporated VASP that operates under full local jurisdiction, holding all required licenses and registrations.
On-shore VASP is conditionally permitted in Ukraine with a local entity, subject to AML obligations and high licensing burden.
Verdict Details
- Permitted
- conditional
- Local entity required
- Yes
- Licensing burden
- High
- Last updated
- 2026-07-13
AML Obligations
- VASPs are designated as 'reporting entities' (subjects of primary financial monitoring) under the Law of Ukraine No. 361-IX 'On Preventing and Counteracting Legalization (Laundering) of Criminal Proceeds, Terrorist Financing and Financing of the Proliferation of Weapons of Mass Destruction'
- Mandatory customer identification and verification (KYC) for individuals: full name, date of birth, place of birth, address, identification number, identity document details
- Mandatory customer identification and verification for legal entities: name, registration number, legal form, legal address, contact details, management structure
- Beneficial Owner (UBO) identification and verification required
- Understand the purpose and intended nature of the business relationship
- Ongoing monitoring of business relationships and transactions to ensure consistency with risk profile and knowledge of customer
- Enhanced Due Diligence (EDD) required for PEPs, high-risk jurisdictions, complex/unusual transactions, non-face-to-face relationships, transactions above thresholds (e.g., equivalent of UAH 400,000)
- Simplified Due Diligence (SDD) may be applied in lower-risk situations but limited given inherent virtual asset risks
- Report suspicious transactions to the State Financial Monitoring Service of Ukraine (SFMS)
- AML/CFT compliance overseen by the SFMS (Derzhfinmonitorynh)
Key Restrictions
- VASP must be a locally incorporated legal entity (permit issued to legal entities only)
- Full licensing regime mandated by the 'On Virtual Assets' Law but secondary legislation (specific permit procedures, capital requirements, technical standards) has NOT been fully adopted as of late 2023/early 2024 — licensing process is largely suspended or not fully operational
- Dual regulator structure: NBU regulates fiat-backed stablecoins/payment services; MinDigital (via NSSMC) regulates other virtual assets — creates potential jurisdictional ambiguity
- Permit required for: exchange (crypto/fiat, crypto/crypto), transfer of virtual assets, custody/administration, participation in issuance/sale of virtual assets
- Indicative capital requirements from drafts: ~UAH 10 million for exchanges, ~UAH 5 million for other VASP activities — but not yet finalized
- Separate accounting required for the VASP's own virtual assets vs. client virtual assets (Art. 12, Part 2, Point 2 of VA Law)
- No explicit segregation/cold storage/insurance requirements codified yet — expected in secondary legislation
- Martial law and wartime priorities have delayed full implementation of the regulatory framework
Key Risks
- Regulatory framework is incomplete — secondary legislation (licensing procedures, capital rules, technical standards) not yet adopted, creating legal uncertainty for operators
- Practical licensing process is largely suspended; operators cannot reliably obtain a VASP license as of early 2024
- Dual regulator model (NBU vs. NSSMC/MinDigital) creates jurisdictional ambiguity for hybrid virtual assets
- Tax treatment of virtual assets relies on general tax principles and administrative interpretation rather than specific crypto tax legislation — limited official guidance from the State Tax Service
- Martial law may lead to shifting regulatory priorities and potential emergency restrictions on virtual asset services
- Enforcement basis includes Criminal Code and Code of Administrative Offenses — exposure to administrative/criminal liability for unlicensed VASP activity
Evidence
This verdict synthesizes the following facts. Each fact links to its primary source(s).
Law of Ukraine "On Virtual Assets" (Закон України "Про віртуальні активи"): Link to Ukrainian Parliament (Verkhovna Rada) website - official legislative acts (You may need to use a translation tool for the full text).
While the VA Law is in force, its full implementation, particularly the practical licensing mechanism, depends on the adoption of secondary legislation (resolutions, procedures, and detailed requirements) by the NBU and MinDigital.
As of late 2023/early 2024, this secondary legislation has not yet been fully adopted, meaning the actual process for obtaining a license is largely suspended or not fully operational. The focus of the government has been on wartime priorities.
National Bank of Ukraine (NBU): Responsible for the regulation of virtual assets secured by currency (fiat-backed stablecoins) and for payment services involving virtual assets.
Ministry of Digital Transformation of Ukraine (MinDigital): Responsible for the regulation of other types of virtual assets, including licensing of Virtual Asset Service Providers (VASPs).
State Financial Monitoring Service of Ukraine (SFMS): Responsible for financial monitoring of transactions with virtual assets and ensuring compliance with AML/CFT legislation.
Evidence fact ua.licensing.exchange-services-between-virtual-assets-and-fiat not found (may have been renamed).
Exchange services between different virtual assets. (Also covered by crypto exchanges).
Transfer of virtual assets. (This includes payment processors that handle virtual assets).
Custody and/or administration of virtual assets or instruments enabling control over virtual assets. (This covers custody providers).
Participation in and provision of financial services related to the issuance/sale of virtual assets.
Currently, the exact, officially finalized capital requirements are pending the adoption of secondary legislation.
For exchanges (providers of exchange services between virtual assets and fiat): Potentially around UAH 10 million (approx. $250,000 - $300,000, subject to exchange rate fluctuations).
For other VASP activities (e.g., custody, transfer): Potentially around UAH 5 million (approx. $125,000 - $150,000).
Law of Ukraine No. 361-IX "On Preventing and Counteracting Legalization (Laundering) of Criminal Proceeds, Terrorist Financing and Financing the Proliferation of Weapons of Mass Destruction" (dated December 6, 2019, with subsequent amendments).
This is the foundational AML/CFT law in Ukraine, bringing the country's framework closer to FATF recommendations and the EU's 4th and 5th AML Directives. It designates "virtual asset service providers" as "reporting entities" (subjects of primary financial monitoring).
Identification and Verification:
Beneficial Owner (UBO) Identification: Identify and take reasonable measures to verify the identity of the beneficial owner(s) of the customer. This is crucial for both individuals (e.g., if acting on behalf of another) and legal entities.
Enhanced Due Diligence (EDD):
Transactions above specific thresholds (e.g., equivalent of UAH 400,000 for certain types of operations, though suspicion requires reporting even below this).
Mandate: The Law "On Virtual Assets" mandates that any entity providing virtual asset services, including custody services, must obtain a permit (дозвіл). This permit functions similarly to a license.
Definition of VASP: Article 1 of the Law defines a "Virtual Asset Service Provider" (VASP) as a legal entity that, as part of its business activities, performs one or more of the following services for or on behalf of another natural or legal person:
Separate Accounting: Article 12, Part 2, Point 2 requires VASPs to maintain separate accounting records for their own virtual assets and those of their clients. This is a foundational step towards ensuring client assets are not commingled with the VASP's proprietary assets.
Issuing Authority: The NSSMC is generally responsible for issuing these permits. For virtual assets secured by monetary values, the NBU would be the responsible authority.
Current Interpretation: Legal entities engaging in virtual asset operations would generally include profits from these operations in their corporate income tax base.
Tax Rate: Corporate Income Tax (CIT): 18% on the taxable profit.
Legal Basis: Criminal Code of Ukraine (Кримінальний кодекс України), Code of Administrative Offenses of Ukraine (Кодекс України про адміністративні правопорушення).
Verdict Attribution
- Source:
- AI-Generated · Unreviewed
- AI synthesized:
- 2026-07-13 (deepseek-chat)
- Last updated:
- 2026-07-13
- Confidence:
- medium
This verdict was produced by an AI model from the underlying facts. Confirm with counsel before relying on it for material decisions.
Conditional — an on-shore VASP is legally contemplated under Ukraine's 'On Virtual Assets' Law but cannot reliably obtain a license as of early 2024 because the implementing secondary legislation (capital requirements, application procedures, technical standards) has not been fully adopted due to wartime priorities, leaving the licensing regime non-operational.
Questions this verdict aims to answer
- What license(s) are required to operate locally?
- What capital, governance, and reporting obligations apply?
- What is the application process and timeline?