The NSSMC: the Law on Virtual Assets shall be properly regulated and provided with effective legal mechanisms

The NSSMC has consistently advocated for the proper regulation of all the areas of financial and commodity markets including the virtual assets sector. Therefore, it supports the amendments to the Law on Virtual Assets suggested by the President of Ukraine.

The Law defines the principles of state regulation of the circulation of virtual assets and the introduction of the surveillance mechanism in this area. However, the statutory wording of the Law has a number of shortcomings and inconsistencies.

In particular, the world practice shows that the regulators of financial markets carry out the regulation of virtual assets trade and circulation. The analysis of the international experience in the regulation of virtual assets shows that certain types of virtual assets in their economic essence contain the features of financial instruments. Accordingly, the regulators of financial markets shall carry out the regulation of the issue of such types of virtual assets. This function is specific to them, given their experience in the regulation of markets of other financial instruments (securities and derivative contracts) and monitoring the compliance with the law requirements in order to protect the rights of investors and prevent fraudulence.

In particular, such Law shall be aimed at avoiding administrative arbitration in regulating the methods of raising funds and making investments.

“First of all, we shall ensure the effective protection of the legitimate interests of investors in the virtual assets market and the appropriate control over the persons offering virtual assets and providing services related to their circulation. Therefore, Ukraine should soon receive a clear legal definition of virtual assets, the proper regulation and supervision on these assets. The NSSMC is ready to cooperate with the colleagues from other ministries and departments in this area, as well as with all stakeholders” – Ruslan Magomedov, the Chairman of the NSSMC.

The Verkhovna Rada of Ukraine adopted the Law of Ukraine on Virtual Assets dated September 08, 2021 (the draft law № 3637). On October 05, 2021, the President of Ukraine submitted his proposals and returned it to the MPs for the revision.