With no investment culture of their own, Ukrainians often overlook traditional assets like stocks and bonds. But powered by a strong tech industry, the country is increasingly turning to alternative assets like bitcoin.

According to a recent survey, the cryptocurrency brought Ukrainian investors $400 million in 2020. The country now ranks 10th globally in bitcoin investment gains, according to a report published on June 7 by Chainalysis, a cryptocurrency analyst.

At the head of a rapidly developing global bitcoin market is the U.S., raking in over $4 billion in profit from bitcoin last year, three times as much as China with its $1.1 billion in bitcoin profits.

By investing heavily in the world’s most popular cryptocurrency, bitcoin, investment gains in Ukraine reached the same levels as South Korea, the Netherlands and Canada —countries with stronger economies and higher gross domestic product rankings.

Chainalysis said that this phenomenon has also played out in other lower-middle-income countries like Vietnam. The report said that bitcoin gives “investors in emerging markets access to a high-performing asset, the likes of which they may not have otherwise had access to.”

In Ukraine, the cryptocurrency market is promising. Last September Chainalysis named Ukraine the world leader in the number of people who use digital money.

The environment is conducive for it: for years buying virtual money like bitcoins in Ukraine was as easy as topping up a cellphone — everyone with a valid email or phone number could do it.

Now, the government is looking to regulate the growing but untamed market. Ukraine’s Ministry of Digital Transformation said that regulations will protect Ukrainians who buy, use and trade virtual assets. Six months ago, Ukraine’s parliament voted for a core bill on virtual assets in the first reading and is preparing to vote for it in the second reading.

Ukrainian investors are wary — they do not understand how the state can regulate a currency that is encrypted and anonymous in nature.

In its recent report, Chainalysis said that countries that try to limit cryptocurrency usage through harsh regulations are preventing the market from growth. Responding to similar complaints in Ukraine, the Ministry of Digital Transformation said that isn’t the case here.

“We don’t regulate Bitcoin, Ethereum, Tether, tokens. The subject of regulation is service providers,” Deputy Minister of Digital Transformation for IT Development Olexandr Bornyakov said.

According to him, it’s better to regulate the crypto industry than to ban it. “Bans will lead to nothing,” Bornyakov said.

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