Report: Ukraine’s Web3 startups hindered by lack of regulations
The Ukrainian Web3 Institute has recently conducted a research report titled “Web3 for Ukraine: Talk to Founders,” which highlights the main challenges faced by web3 technologies in Ukraine. The study reveals that the absence of clear guidelines on how to engage with government institutions has made it difficult for web3 startups to collaborate with these agencies.
As a result of this lack of regulation, web3 startups are forced to incorporate in foreign jurisdictions. The Ukrainian Web3 Institute has urged the government to take immediate action in addressing the regulatory challenges faced by the web3 sector. They emphasize that the absence of a clear regulatory framework is one of the primary reasons why web3 companies choose to incorporate abroad. Currently, there are no specific legal regulations in Ukraine for registering crypto-related startups.
To conduct this research, the Ukrainian Web3 Institute interviewed 50 web3 founders across 19 sectors of the web3 economy. This research was supported by the Ministry of Digital Transformation in Ukraine.
Although Ukraine has not yet established clear rules for crypto businesses, the country is already taking steps to implement FATF’s requirements for cryptocurrencies. This is to avoid being included in FATF’s grey list. Yulia Parkhomenko, the director of the virtual assets department at the Ministry of Digital Transformation of Ukraine, warns that failure to comply with international rules puts the country at risk of being placed on the grey list.
As previously reported, the draft law No. 10225-1 aims to establish regulatory norms that will create favorable conditions for crypto businesses in Ukraine. This draft law is currently being considered by the Ukrainian Parliament (Verkhovna Rada) and includes requirements such as mandatory registration for crypto exchanges, customer due diligence, and reporting of suspicious transactions.
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