Ukraine’s legislative effort involving cryptocurrency regulation has had a successful first hearing in the nation's parliament, the Verkhovna Rada.

After being discussed and given the initial thumbs-up by lawmakers Wednesday, the Draft Bill on Virtual Assets now has two more hearings before it can become law. 

If that happens, Ukraine will join the still-short list of nations that have put in place dedicated laws regulating cryptocurrencies. The country was named a global leader in crypto adoption by blockchain analytics firm Chainalysis in September when citizens were actively using crypto for savings, investment and cross-border trade. 

Things were not completely smooth for the bill during the parliamentary hearing: Some lawmakers decried spending time on virtual assets when there are more important issues besetting the Ukrainian economy. However, in the end, the bill received 229 “yes” votes out of 340 and passed this first stage of the legislative process. 

The bill defines virtual assets as “a set of data in electronic form,” which “can be an independent object of civil transactions, as well as certify property or non-property rights.” The law suggests not considering virtual assets as legal tender in Ukraine.

The document singles out virtual assets backed by goods or services, suggesting they must be taken out of the market in cases where the backing ceases to exist. 

The ownership of virtual assets is considered as being the entity holding the private keys, unless they are held with a custodian, forfeited by the court decision or acquired illegally. 

Virtual assets would be regulated by Ukraine’s Ministry of the Digital Transformation, and crypto service providers must register to be able to operate in the nation. Firms must provide information on ownership structure and beneficiaries, as well as ensure they don’t facilitate money laundering and are diligently protecting users' personal data. 

Also read: Why Ukraine Is Ripe for Cryptocurrency Adoption

The Ukrainian crypto community sometimes finds itself at a disadvantage on global trading platforms. For example, in September, Bittrex temporarily stopped serving users from Ukraine, along with Belarus, Burundi, Mali, Myanmar, Nicaragua and Panama. The exchange did not give specific reasons, citing only “the current regulatory environment” in the affected jurisdictions.

The Ministry of the Digital Transformation believes introducing a clear regulatory regime would encourage crypto businesses to work with Ukrainians and open shop in the country. The ministry drafted the bill in collaboration with Ukraine’s crypto community, although some members are vocally opposed to the very idea of crypto regulation.