A crypto bank for businesses will appear in Ukraine.
IT Hub has initiated the creation of Ukraine's first cryptobank for businesses. The project has been approved by the National Bank and the Ministry of Digital Development, Communications, and the Tax Service. It's already being prepared for launch. We'll discuss the goals of the future cryptobank, who it might benefit, and the unique legal know-how behind the idea.
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Innovative project
Renowned IT entrepreneur Ivan Kosyuk, founder of IT Hub, announced the creation of a cryptobank for businesses in Ukraine. This is a unique initiative: our country currently lacks financial institutions willing to offer businesses the opportunity to work with cryptocurrency as a regular electronic asset.
According to the businessman, the IT Hub team is working on launching a crypto bank in collaboration with the Juscutum law firm and another partner, whose name has not yet been announced. Together, they have developed a project for an innovative financial platform within the framework of "barter legislation."
Other startups have also expressed interest in the idea of creating a crypto bank. However, the main obstacle to its implementation so far has been the lack of necessary regulations. As is known, the law on cryptocurrency has been passed, but is not yet in effect.
Judging by the fact that the creation of a cryptobank has received preliminary approval from the tax authorities, the National Bank of Ukraine, and the Ministry of Digital Development, Kostyuk and Co. have proposed a feasible way to implement such a project.
What is known about the legislative regulation of cryptocurrency transactions?
On February 17, 2022, the Law of Ukraine "On Virtual Assets" (hereinafter referred to as the Law) was adopted. This regulation governs legal relations arising from the circulation of virtual assets.
However, in fact, the provisions of the Law have not yet entered into force. The reason is that the related amendments, which must be introduced into the Tax Code of Ukraine (TCU), have not yet been adopted.
At what stage are amendments to the Tax Code being introduced?
On March 13, 2022, the corresponding bill No. 7150 "On Amendments to the Tax Code of Ukraine on the Taxation of Transactions with Virtual Assets" was submitted to the Verkhovna Rada of Ukraine.
However, BP has not yet considered this project.
Consequently, no amendments have been made to the Tax Code, so the already adopted Law is not yet in effect. It has been put on hold.
A solution for businesses wishing to work with crypto has been found through "barter legislation." This is precisely the legal know-how of the initiators of the idea to create the first Ukrainian cryptobank.
How will it work?
According to Ivan Kosyuk, he and his partners built a system based on "barter legislation." The idea is that cryptocurrencies will be accounted for like regular electronic assets.
The project's initiators believe that digital businesses need a financial instrument capable of interacting with the global economy of the WEB 3.0 era. They offer the first legal way to use cryptocurrency for business.
There are many digital asset owners willing to make various payments in crypto. However, Ukraine has not yet developed a convenient mechanism for declaring cryptocurrency income, and taxation is unregulated.
As a result, many earn money "under the table." And if the volumes are large, the work is fraught with significant inconvenience. This is especially true for those who conduct part of their business "legally."
Furthermore, the idea of a crypto bank will certainly appeal to digital entrepreneurs who earn income in foreign currency:
- they will be able to bypass the losses that are inevitable due to conversion;
- They will also have the option to pay employees in Tether (USDT), which is dollars;
- transactions will be processed significantly faster - a few minutes, not days as now.
Who is developing the crypto bank?
IT Hub
IT Hub employees are working directly on the cryptobank's creation. Ivan Kosyuk founded this startup three months ago, and he is responsible for product development. The company already employs 20 specialists.
Juscutum
Artem Afian, head of the Juscutum law firm, handles legal matters and communications with government agencies.
Investment attraction company
The name of the third project participant responsible for investments has not yet been disclosed.
According to I. Kosyuk, he personally assembled the team of specialists involved in the cryptobank project. "We're working for free for now, because we're just doing the preparatory work," the entrepreneur says. "The product itself hasn't been launched yet. The main phase of its development will begin after the investment round closes."
The startups are aiming to actively seek investors and want to raise ~$300,000 - 400,000 for a pre-seed round.
What do the NBU, the Ministry of Digital Development, and the Tax Service say?
According to the idea's initiators, they presented their project to representatives of the National Bank, the Ministry of Digital Transformation, and the State Tax Service of Ukraine.
The responsible persons of all the listed regulatory bodies considered the project promising and approved the possibility of its implementation.
The main topic of discussion was the creative use of "barter legislation." The developers of the future cryptobank were the first to come up with this idea. In fact, this approach is truly innovative.
The cryptobank idea was made possible thanks to the legal expertise of the project's initiators. They selected mechanisms from the existing legal framework that allow for legal payment for services using crypto assets.
If the idea is implemented, cryptobank clients will be able to:
- legally declare cryptocurrency income;
- Pay salaries in crypto without the extra costs associated with conversion;
- work legally and make tax deductions;
- formalize contracts with clients worldwide in 10 minutes;
- avoid losses due to exchange rate differences and receive transfers faster;
- Conclude smart contracts with business partners, specifying all the terms of the transaction (no intermediaries or notaries are required).
Cryptobank concept
- New definitions of cryptocurrencies have been developed.
- A list of operations that can be carried out with digital money within the framework of the cryptobank has been compiled.
- The positioning of cryptocurrencies as assets that can be disposed of within the framework of “barter legislation” has been approved.
According to the project's initiators, the cryptobank will not hold user funds. This means it will become a more independent financial institution than traditional banking institutions.
When might a crypto bank appear?
The project's initiators have developed a website to present their concept. The whitechain.city platform is currently operating in beta mode.
The main goal of the platform is to collect the opinions of those interested in the existence and use of such a service.
The website invites you to join the beta test and get 6 months without commissions.
The developers believe in their success and hope to become official partners of Diia City in the very near future.
The product launch itself is scheduled for the fourth quarter of 2022.
- beta version release - October;
- Functionality expansion - for November-December.
How many crypto banks are there in the world?
Despite the popularity of crypto, there are only a few licensed financial institutions in the world that deal with digital assets and can be called crypto banks.
Sygnum and SEBA
These include blockchain startups Sygnum and SEBA, which received temporary banking and securities licenses from the Swiss financial regulator Finma in 2019. Sygnum even created its own digital payment token, backed by the Swiss franc.
Anchorage
The world's first federal license for a crypto bank was issued in the United States. It was received by Anchorage in early January 2021. This was a landmark event for the entire industry. Anchorage provides digital asset custody services, including for institutional investors.
