Nikolay Udyansky, a Ukrainian IT businessman, co-founder of the Coinsbit crypto exchange, creator of the bitcoin fork Bitcoin Ultimatum and a member of the top 100 richest Ukrainians according to Forbes, spoke in an interview with RBC-Ukraine about the current situation on the crypto market, the legalization of digital currencies in Ukraine and how the state digitizes the country.
– Bitcoin was in all the news in the spring, but now almost nothing is heard about it. What is happening with him now and with the cryptocurrency market as a whole?
Everything is fine with bitcoin. Now, of course, it does not cost $60,000 as in March, but in September its rate rose to $50,000 and this is an excellent result. Bitcoin is not going anywhere, it has become part of the financial world and this is forever. It is the trigger of the entire cryptocurrency market and sets the rate of growth or fall for other cryptocurrencies. Cryptocurrencies are the future of the world of money. At the stage of its formation, the crypto market was the Wild West, where everyone did what they wanted. But now he has embarked on the path of regulation. That is why on September 8, the Verkhovna Rada launched the process of legalizing the cryptocurrency market in Ukraine.
– Tell us more about it. Why hasn’t parliament legalized cryptocurrencies yet?
– The only country that has legalized cryptocurrencies is El Salvador. But they did it hastily and therefore such a decision did more harm than good. Now this country may be left without external borrowing, which will eventually bring down its economy.
Ukraine follows a different path – unhurried, thoughtful and as legal as possible. So far, the parliament has adopted a bill “On virtual assets”. It clarifies what cryptocurrencies are and gives them legal status. Owners of digital assets in the future will be able to legally buy and exchange them. But this is a basic document, and it needs to be improved.
– What improvements are we talking about?
– When it comes to cryptocurrencies, all officials care about only one thing – taxes. Therefore, the next step of the Ukrainian parliamentarians is the taxation of digital assets. For example, the adoption of the draft law “On Amendments to the Tax Code of Ukraine regarding the taxation of the turnover of virtual assets in Ukraine”.
The main goal of this document is to stimulate the development of the crypto market in the country with the help of special tax breaks. It is planned to exempt the cryptocurrency business from VAT and establish a five-year preferential regime for it, according to which the income tax for legal entities and individuals will be only 5%. True, for the latter, a military tax of 1.5% is added. You will only have to pay tax on profits. And everything that happens on the stock exchange is of little interest to the regulator.
In early September, the Verkhovna Rada approved the draft law on virtual assets in the second reading (photo: Vitaliy Nosach, RBC-Ukraine)
– Let’s talk about crypto exchanges. How many of them are there in Ukraine now and why are they needed?
– Today, several large exchanges operate in Ukraine. It is difficult to name the exact number due to the fact that many of these sites are not registered in Ukraine, but at the same time they work with the hryvnia.
What are they needed for? First of all, for trading cryptocurrency and withdrawing it into fiat. Of course, there are also online exchangers and cryptomats, but they perform a limited set of functions. For example, exchangers are used to quickly transfer cryptocurrency to hryvnia. And bitcoin ATMs are for replenishing a bitcoin wallet.
Crypto exchanges are a full-fledged cryptocurrency platform with a wide range of additional features, such as derivatives. In simple terms, a crypto exchange is a digital analogue of a stock exchange, but trading not in shares, but in tokens.
– How can stock exchanges be useful to ordinary Ukrainians? After all, they are quite difficult to use.
“Actually, it’s not as difficult as it seems. Even 10 years ago, before the advent of crypto exchanges, cryptocurrencies were the lot of geeks. The process of buying and holding bitcoins was incredibly confusing and required a variety of technical knowledge. But these times have sunk into oblivion. The industry has embarked on the path of mass adoption and is trying to simplify everything as much as possible.
To facilitate the purchase and use of digital currencies, crypto exchanges are now actively cooperating with both banks and various payment systems like Visa and Mastercard. In collaboration, they release applications and payment cards that have cryptocurrency on their balance sheet, but are freely converted into the same hryvnia during settlements.
That is, a person can purchase, for example, bitcoins, and then spend them at any time simply by attaching a card or smartphone to a terminal in a store or cafe.
In the event that cryptocurrencies are finally legalized, exchanges will be able to refuse intermediaries and will provide their services directly. It will accordingly be easier, faster and cheaper than it is now.
– Everyone has heard the story of the man who spent 10,000 BTC to buy pizza. But everyone can spend. What about earnings? Is it possible to make money on cryptocurrencies and how to do it?
– There are many options for earning money in the cryptocurrency industry. The easiest and most reliable is to buy a cryptocurrency and wait for it to rise in price. They even came up with a term for this – HODL.
There are also cryptocurrency faucets. These are sites where for certain actions you are given some coins. If you are persistent, you can accumulate a good amount over time.
Previously, it was possible to make good money on ICO, but now this topic has become obsolete and it is better not to get involved with such projects.
Also, not so long ago, mining was quite profitable. But due to the fact that large companies began to stray into pools, it is now difficult to make money here. You can try to mine little-known coins, but video card manufacturers have inflated prices so much that it will take a very long time to beat off the purchase.
Even now, blockchain games have begun to appear, where you can sell game items or resources for cryptocurrency. But all these projects are quite “raw” and you can just waste your time.
All other types of earnings are associated with crypto exchanges: staking and trading.
Staking is like a bank deposit. The user must keep cryptocurrencies on a special wallet or exchange. And for the fact that he does not use them, he receives passive income.
And finally, trading is the trading of digital assets. There are many tactics and strategies for trading cryptocurrencies, but they all come down to one thing – buy low and sell high. The principle of speculation works in all markets without exception.
– It turns out that most of the ways to earn money are somehow connected with exchanges?
– Undoubtedly. Exchanges are the door to the world of cryptocurrencies. You can trade, invest and withdraw virtual assets into cash on them. The main thing is not to get involved in trading “with leverage”. The basic rule of trading is not to invest more than you are willing to lose.
– Nikolai, your activities are connected not only with cryptocurrencies, but also with IT technologies. What do you think about the digitization of Ukraine using the Diya app?
– The idea is excellent, but the Ministry of Digital Development had problems with its implementation. Take, for example, COVID-certificates. This document should make it easier for Ukrainians to travel abroad, but not everyone can get it in digital form. For some reason, the Ministry tied this document to “Diya.Pidpis” and many Ukrainians simply cannot download it to their phones.
But overall, the app has potential. Now it has a limited list of services: driver’s license, passport, identification code, etc. But in the future, its capabilities are planned to be significantly expanded. More than ten new services will soon be added to Diyu, which should eradicate paper documents and bureaucracy. For example, in the application it will be possible to issue subsidies, social assistance and pensions.
– Are there analogues of such applications in the world?
– I got the impression that the developers of “Diya” were guided by the most popular application in China – Wechat. It is not only a messenger and a social network, but also a service for ordering tickets, calling a taxi and a mobile wallet. That is, with the help of Wechat, you can pay for various services, which “Diya” is not yet able to do.
According to Nikolai Udyansky, the application of the Ministry of Digital Development has potential (photo: Vitaliy Nosach, RBC-Ukraine)
But in general, it is worth giving our Ministry of Digital Development an extremely high rating. The guys did a great job creating an application that has no analogues in the world. All specialists of the ministry have done a crazy, fantastic job and deserve all praise, because they have taken a huge step towards the development of digital civilization in Ukraine.
– Do you think that “Diyu” should be made a payment instrument?
– Why not? Especially in the context of the fact that the state has been thinking about the introduction of e-hryvnia for many years. It would be right. But in addition to public money, I think it is logical to add support for cryptocurrencies. Especially against the backdrop of such positive regulatory movements in our country. For our part, we are ready to help the Ministry of Digital Development and offer our own developments in this direction. “Diya” should support cryptocurrencies.
– Do you have experience of cooperation with government agencies?
– We are already cooperating with the Ukrainian authorities. Our company Prof-IT is just finishing the development of a new Ukrainian cryptocurrency exchange. The project was named Qmall. IBOX Bank will be responsible for payments. It will provide the deposit and withdrawal of the hryvnia with a minimum commission. Its launch is scheduled for October-November 2021. After that, Ukrainians will be able to receive exchange bank cards.
The uniqueness of the project is that it will be the first Ukrainian stock exchange, fully regulated by the Ministry of Digital Development and the National Bank, we are also developing a serious platform for one of the ministries, while we leave the intrigue, this will be a big breakthrough for Ukraine.
– How important is it to have a regulated, civilized crypto exchange in Ukraine?
– A Ukrainian legal crypto exchange is a must. Trading on foreign exchanges like Binance is very dangerous. There are many cases when accounts are frozen there and people cannot get their money. These exchanges often experience internal hacking attacks. Therefore, it is imperative that the stock exchange be Ukrainian, that it have its own office in the country. This is an additional guarantee of safe investment and safe work with cryptocurrency in Ukraine.
In addition, the advantage of the domestic exchange will be training in trading operations and improving financial literacy when working with cryptocurrency. Finally, such an exchange will not have coins that were created only to swindle people out of money.
– How do you assess the digital progress of Ukraine in general?
– We are moving into the digital world at full speed. Ukraine is one of the world leaders in the circulation of cryptocurrencies. It is quite likely that in a few years cryptocurrencies will fully enter into the everyday life of ordinary Ukrainians and everyone will be able to earn money on them.