Key takeaways

• Ukraine is likely to become the next country to adopt Bitcoin as legal tender.
• Number of countries giving cryptocurrencies legal status is growing after El Salvador adopts Bitcoin.

Bitcoin is becoming more of a global phenomenon as more countries are paying attention to adopting it as a currency standard. According to experts, Ukraine is gravitating towards becoming the next country to adopt Bitcoin as legal tender.

There are indications that the country is leaning more into Bitcoin and the end goal of the government could be to become a dual-currency country like El Salvador. As recently reported, Ukraine’s president Volodymyr Zelensky sent a delegation to meet with counterparts in El Salvador ahead of creating a plan to put cryptocurrency adoption at the top of the country’s financial agenda.

One expert, Professor Vyacheslav Evgenyev believes the plan is for Ukraine to make Bitcoin legal tender by the start of 2023 and even maybe eventually phase out the country’s current currency, the hryvnia. The professor thinks it is likely to happen as Ukraine has a lot of similarities with El Salvador. Ukraine, like the Central American country, has a millennial president who has been very outspoken about Bitcoin. The country also has a diverse energy mix that can attract a lot of Bitcoin miners. To top it all, Ukraine happens to have a young population and a strong desire to come out of the shadow of its powerful neighbor; Russia.

“The project will take less than two years to complete, with or without the support of international financial authorities, and will see Bitcoin becoming the dominant currency of Ukraine,” said the professor.

The number of countries giving cryptocurrencies legal status is growing. Just last week, Ukraine passed a bill –  “On Virtual Assets” – to give cryptocurrencies legal status. The bill legally recognizes cryptocurrencies in the country for the first time. It defines and categorizes virtual assets as both secured and unsecured intangible goods. However, cryptocurrencies are not accepted as a legal means of payment, and their exchange for other goods or services will not be allowed.

The law is expected to enter into force after lawmakers approve amendments to the country’s tax code about the taxation of cryptocurrency transactions which they are yet to vote on. In a previous move, Ukraine’s president Volodymyr Zelensky passed a law – On Payment Services – that gave powers to the country’s central bank to issue a central bank digital currency (CBDC) – the digital hryvnia.

Similarly, in Panama, a bill was proposed by Panamanian legislator Gabriel Silva to regulate cryptocurrencies last week. The draft law he presented in the National Assembly is titled “Crypto law: Making Panama compatible with the digital economy, blockchain, crypto assets, and the internet.” It proposes the legalization of cryptocurrencies, like bitcoin and ethereum, as a means of payment, including for paying taxes.

Just like key market observers and players such as Charles Hoskinson have noted, El Salvador has inadvertently set the tone for other countries to follow with their passage of the Bitcoin Law that made Bitcoin legal tender alongside the dollar in the country. Hoskinson, the founder of Cardano, praised the milestone that the country achieved and stressed that other countries would be forced to think deeply of their cryptocurrency strategy now.

El Salvador, being the first mover, is however under close observation by other countries. Among the results the country expects to see for its bold step is reduced fees paid to remittance companies such as Moneygram and Western Union, thereby boosting the country’s GDP. By president Nayib Bukele’s estimates, remittance companies in the country stand to see as much as $400 million reductions in annual profits from the country.