Online Identity Verification Services

How Crypto Legalization Will Redefine KYC for Ukrainian Platforms

Ukraine has become one of the world’s most active crypto hubs, with a rapidly growing ecosystem of blockchain startups and a tech-savvy population. Now, the government has taken its first step toward creating a more regulated crypto market. On September 3, the Ukrainian Parliament passed draft law No. 10225-d on virtual assets in its first reading.

For companies, this opens up new opportunities. At the same time, it brings certain challenges. Let’s break down what this means for Ukrainian crypto businesses and how they can prepare.

What the New Law Brings to the Table

While there will be advancements and it still needs a second vote before becoming law, the draft lays out a clear vision for how the crypto market will operate in a regulated environment.

The centerpiece of the legislation is the introduction of rules for Virtual Asset Service Providers (VASPs) — essentially, any company that offers exchange, wallet, or custodial services for digital assets.

In practice, this means that:

• VASPs will need to register with state authorities before they can legally operate.

• Companies must implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.

• The National Bank of Ukraine and another designated authority will supervise compliance, similar to how regulators in the EU oversee financial service providers.

These requirements bring Ukraine’s crypto industry closer to the European regulatory model. For example, in the European Union, similar rules are implemented under the MiCA regulation, which mandates that Crypto-Asset Service Providers (CASPs) obtain a license and conduct KYC/AML checks for their customers.

“Clear rules and alignment with EU legislation will allow Ukrainian founders to start crypto companies in Ukraine and pay taxes locally, instead of doing it abroad. It’s important for Ukrainian licenses to be recognized in the EU.”

— Denys Galenko, Co-founder of Allpass.ai

What The Law Introduction Means for Ukrainian Crypto Companies

Ukraine’s new framework translates into very concrete responsibilities that crypto businesses will have to abide by:

• Identity verification. Every customer — whether an individual or a business — must prove who they are before using a platform. That could mean uploading an ID, taking a selfie, or going through an automated onboarding flow.

• Beneficial ownership checks. For corporate clients, VASPs need to identify the ultimate beneficial owners (UBOs) — the real people behind the company — not just the shell entity.

• Transaction monitoring. Exchanges and wallets will have to keep an eye on activity, flagging anything suspicious (for example, unusually large transfers, or funds linked to sanctioned entities).

• Ongoing due diligence. Businesses will be expected to perform regular reviews, especially for higher-risk customers.

Businesses that do not register or meet KYC/AML requirements may face fines or even restrictions on their right to operate. The legislation also foresees a transition period, during which companies will need to adapt their systems and processes.

Failure to comply with these obligations will result in fines for Virtual Asset Service Providers, which will be applied at reduced rates during the transition period (in 2026 – 10% of the standard fine, and from 2027 to 2029 – 25% of the standard fine).

Challenges and Opportunities Ahead

For crypto businesses, the new framework presents an opportunity to grow. But it can also be a hurdle.

On the one hand, companies will need to invest in compliance infrastructure, rethink onboarding processes, and train teams to meet KYC/AML standards. These are real costs — in terms of time, money, and expertise.

On the other hand, operating in a regulated space means greater transparency, stronger investor confidence, and a more direct path to global markets. In fact, for businesses ready to adapt, regulation can become a competitive advantage.

“KYC is often seen as a cost that can make potential customers drop off. But once the right processes and tools are in place, it quickly turns from a burden into an advantage that enables growth.”

Denys Galenko, Co-founder of Allpass.ai.

Software solutions are already available on the market to help companies adapt to these new requirements. One example is Allpass.ai, a Ukrainian platform that enables crypto businesses to implement KYC processes more quickly, easily, and cost-effectively, ensuring they remain compliant with the upcoming law.

Final Thoughts

Ukraine’s move toward a regulated crypto market is a significant milestone for the industry. While compliance introduces new responsibilities, it also opens doors for growth and expansion. Companies that adjust early and use the right tools will have a smoother path and a stronger position in this changing landscape.