Challenges of cryptocurrency regulation within the Ukrainian legal framework

Abstract

The growing role of cryptocurrencies in the global financial system is transforming traditional mechanisms of economic interaction, promoting the development of the digital economy, and creating new formats of financial relations, while at the same time giving rise to risks of tax uncertainty, legal status, financial security, and consumer protection. The adaptation of national legal systems to the challenges of the digital economy is a strategic prerequisite for integration into the global financial space. However, in Ukraine, despite the high level of cryptocurrency adoption, the regulatory framework remains fragmented and insufficiently harmonized with international standards (MiCA, FATF), which hampers integration and reduces the market’s investment attractiveness. The aim of this study is to conduct a comprehensive analysis of cryptocurrency regulation in Ukraine, identify key domestic challenges, and develop tools for improving the regulatory framework in accordance with European requirements. The methodological basis includes a systemic and comparative legal approach, methods of legal analysis, structural-logical generalization, and visualization of results. The key issues of national cryptocurrency regulation have been summarized, including the absence of a legally defined term "cryptocurrency", tax uncertainty, partial implementation of AML/CTF standards, weak judicial practice, lack of effective consumer protection mechanisms, and incomplete harmonization with the EU MiCA Regulation. A comparative analysis of Ukraine’s legal model and international approaches was conducted, revealing structural gaps and fiscal risks. An original algorithm for the step-by-step implementation of cryptocurrency regulation in Ukraine was developed, encompassing stages of legal definition, taxation, financial monitoring, institutional coordination, and EU integration harmonization. A legal priority map has been proposed, structured into urgent, medium-term, and long-term measures aimed at eliminating regulatory inconsistencies, increasing market transparency, strengthening participant protection, and integrating Ukraine into the EU digital single market.