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Real Estate Registry on Blockchain: Promise Land or Wishful Thinking?

Researcher from RMIT explains why startups will fail to fulfil their promises to disrupt real estate with blockchain.

Why have blockchain pilots in real estate abated somewhat? Those projects bump up against the fundamental inconsistency of blockchain and existing state system, and it seems they cannot confessed to this.

First, there is no such thing as the use of blockchain for real estate. There are plenty of different concepts and ideas, and as you will find below, some of them are useless. And when you consider probably the most ultimate idea — i.e., a title token — you understand that none of the existing projects could offer a complex solution to address issues with inheritance, lost private keys, co-ownership, delegation of rights and a bunch of legal issues that arise from blockchain immutability. The only scenario you can find is permissioned decentralized ledger technology (DLT), which is just yet another centralized technology — or blockchain with “smart” applications on top but which are centralized in their core design. These issues remain unnoticed in blockchainization buzz. Let’s go through known projects and bust their myths.

Honduras

The first news of the use of blockchain for cadastral registry proliferated as a gospel in 2015 from Honduras with the help of Epigraph and Factom Inc. Being referred to by many enthusiasts for a long time, the project itself was never kicked off. And here we find the first fundamental constraint, though not a technological one:

Highly corrupt countries could significantly benefit from blockchain — a temper-proof, transparent, public and decentralized database; but they won’t until kleptocratic regimes run their countries.

Chromaway

Chromaway was founded in Sweden in 2014, giving hope of disrupting the old-fashioned centralized and bureaucratized real estate cadastre. In a YouTube demonstration in 2019, the team showed their centralized DLT platform, “Chromopolis” (which is not a blockchain like any other permissioned DLT platform), and revealed a lab prototype app for title deeds. The app requires government clerks and brokers to “bless” transactions between counterparties. And here is unveiled the second most significant misconception. In general, the problem of the architecture of such systems is that records have legal force only when they are stored in the closed governmental database, all peer-to-peer transactions on the blockchain between parties make no sense, as far the last word is on the side of the one who controls the central registry:

A centralized system is an antipode to uncensored distributed public technology of blockchain. Any attempts to make friends with these two, in which centralization reserves a leading role, are doomed to failure because the blockchain loses all benefits.

Without shifting from centralized to distributed architecture, any attempts of disruption turn into mimicking the existing system. In fact, nothing more happens than digitizing bureaucracy and middlemen. However, Chromaway teaches us another lesson: Over five years, the project did not succeed in introducing a working system at the state level but announces, from time to time, new phases of its development. The problem here is:

Prosperous and highly developed societies often fail to find reasons to change the existing system. What for, if it works, though imperfect?

It must make extraordinary sense for changes, especially at the scale of a whole country. And it is clear that the Swedish government has no incentive to let go of its monopoly on political power over centralized cadastral registry. To add, Chromaway, during its initial coin offering (ICO) in August 2018, wrote in its white paper that it is going to develop the DLT network and will keep centralized control over it and promised to decentralize it in the future. It was also revealing that its white paper articulated no direct plans in real estate and cadastral registry. Therefore, it leaves little hope that the real estate revolution is coming from Chromaway.

Dhana, Bitfury and others

Bitland has been in Ghana since 2014, and the project has never delivered its objectives to “register land and real property ownership and use rights” using blockchain. Propy Inc., during its ICO in 2017, stated that its far-reaching plans were to disrupt the industry by eliminating third parties with a global real estate supermarket on the blockchain driven by smart contracts. However, its supermarket, at this stage, looks like yet another real estate broker’s platform that has no relation to any land title registry. And this is very convenient, as it can always say that it had never promised disruption at this phase. The demo of the project gives some hope for the future, though it is not accessible for public online registration.

REX, founded in the United States in 2016, promised a new multiple listing system (MLS) standard for real estate brokers, ending up with the Imbrex online ad listing protocol for brokers and landlords — and, if we forget about the high-level idea to get rid of the enormous amount of middlemen in real estate, it looks like a success. 

Velox.re demonstrated in Cook County, Chicago how hashing on a blockchain could imitate a real cadastral entry but ceased its activities in this direction. Bitfury launched its centralized DLT based on the Exomun DLT framework in the Republic of Georgia and Ukraine. The project purposed to hash records of the real estate database on Exomun. Some professionals suppose that its impact at the security level of the government-owned land registry is inconspicuous. Notwithstanding, we need to give credit to Bitfury because it has never aimed to de-bureaucratize the domain and reduce middlemen.

Related: Wine, Mountains, and Mining Rigs: Georgia as a Crypto Powerhouse

How did the revolution come tumbling down?

To explain why the mentioned projects failed to revolutionize real estate (some did not even promise that, but many believed in it because they used the magic word “blockchain”), we should clarify the most important conceptual inconsistency of the blockchain and traditional legal system.

The problem is the immutability of blockchain records. One may say this is an advantage, but the current paradigm stands on the centralized hierarchical model.

The last 2,000 years since Roman law appeared, people developed lots of legal doctrines to protect property rights. All of them have been based on an imperfect nature of people’s relationships and the need to fix problems when they arise. Blockchain appeared ill-prepared to deal with the theory of law and state — and actually, nobody designed the technology with these prerequisites. Or perhaps we should change the theory to fit the blockchain? Tough question, isn’t it?

High-level ideas recently discussed in the industry and academia do not answer the main question: How exactly can blockchain technology be applied? When these scenarios are analyzed, it becomes clear that there is no single use of blockchain for real estate but an array of bold ideas.

Anyway, in general, blockchain beyond cryptocurrency can be used to: 

  • Insert arbitrary user’s data (for example, hashes).
  • Create tokens.
  • Manage tokens with smart contract.
  • Develop so-called decentralized applications (DApps).

Related: Blockchain-for-Land: What We Are Getting Wrong and How to Fix It

Hashing cadastral records

First of all, this is not about disrupting bureaucracy but about information technology security. And the use of studied pilots in Georgia and Ukraine with Bitfury is questionable. The real estate registries in both countries remained centralized and closed. If the cadastral database with title records is not open — and whatever hash value thereof is inserted in the blockchain/DLT — then it does not secure the record itself. The reason why is that the record can still be tampered with while it stays in someone’s hands. When the record is tampered with, the hash from such a fake record can also be published on the blockchain as well — and then revealed as legitimate. Moreover, in these pilots, so-called “blockchains” appeared not to be a blockchain but a centralized and closed DLT, known as Exonum.

Even if we consider here the use of a real public blockchain, we will have another problem: How do we know which record is authorized? Transactions on the blockchain are pseudonymous and uncensored — so, anyone can make any records, including fake ones. We need a layer of authentication. Someone centrally will identify and authorize state-owned blockchain addresses, from which records are published. And then, another centralized, off-chain system will track the blockchain to filter and collect a white list of correct hashes, which are considered to be made by authorized clerks. Having such a level of centralization, this approach can barely compete in terms of security with existing governmental databases.

Hashing records of deeds

Let’s say a buyer and seller came to an agreement expressed in an electronic file, its hash was published on the blockchain, and we consider it as a deed.

The first issue is the authentication of the parties: How do we know that it was Alice and Bob who hashed this record in the blockchain? We can use here something that we know as Public Key Infrastructure (PKI) with trust ID services. This means they will deal with a trusted third party that creates and manages digital identities: Certificate Authorities (CA) or Trust Service Providers (TSP) in the U.S. and European Union respectively (other counties replicate these models). For example, in the EU, this system is well-developed (see, for example, Estonian e-Residency) and allows remote authentication of users; however, this is very regulated and bureaucratized.

One may ask: What if Alice and Bob identify themselves without trusted third parties? Yes, they can deal remotely if they trust their remote identities. The problem is that the government does not trust them. No government will allow anonymous and fake IDs because of two main reasons: money laundering and terrorism financing.

But if conventional PKI is used, then why do we need blockchain at all? The parties will remotely sign the e-deed with their digital signatures, issued by CA/TSP. If you trust the cryptography of blockchain, then there is no reason not to trust PKI, which is based on the same.

Besides technological discussion, here appears a legal issue: How is it possible to acknowledge an e-deed? A town clerk (a notary, a registrar, a title company or whoever is responsible for that in a certain state) must also apply its digital signature. For many countries, such a deed would be so innovative that it would require new regulations. Therefore, when startups promise to disrupt real estate and forget to mention that they need to change the legislation, they are cheating or are just premature. 

Even though we legitimized electronic contracts, there is still the system of a state-owned database. So, you end up with the registration of this deed that is made by a town clerk (notary, title company, etc.). So where is the advantage of the blockchain? Therefore, not shallow but significant changes are required in the whole paradigm. 

Smart contracts with title tokens

While the idea is very broad, let’s shrink it to a typical, possible scenario. One party has a token that represents a land title, and another party has some cryptocurrency. 

The smart contract is designed to perform an atomic transaction — i.e., to exchange the token for an agreed amount of cryptocurrency. In this scenario, a notary is excluded (or who is meant to acknowledge the deed in any particular jurisdiction) and the deed, therefore, is not legitimate. 

The second, while titles/deeds live in the central state database this transaction has no legal meaning. This token, as per law, represents nothing, even if the parties want it to be a title. It is clear that new regulations are required to legitimize these relations.

If we assume the government recognized title tokens and such transactions, then what must happen when the landlord dies and does not leave the private key to anyone? Or, if the owner simply loses the key? What if the transaction is disputed by someone whose rights were violated? What if the private key was taken as a result of a crime? How will custody represent rights of a disabled person? Or, how can a judge split the land between divorced spouses? And this is just a small list of possible legal issues that will bump up against the immutability of records and strong cryptography, which won’t allow anyone but the owner of the private key to have access.

Should we consider all transactions always valid, no matter what happens? Then, the landlord and the successors lose their property when the key is lost, and the court ruling to reinstate someone’s title will be useless, as it cannot be enforced.

Reissue a new token? Then, what if the lost key is found or the defeated party in a lawsuit still uses its private key, actuating a transaction with the old token? We will have two tokens that represent one title. Collision with double spending of the same real estate is inevitable. Then what?

Okay, let’s allow anything to happen on the blockchain but treat all these transactions only as evidence, as a source of facts whether they are lawful or not. We will then develop a separate title/deed registry in which we will write a consummation and strike out thereof when something goes wrong.

But don’t we already have such a registry in each country, with regulations and instructions on any possible situation — what we call bureaucracy? Didn’t we want to get rid of that?

It’s clear that people do not like tedious legal procedures, as they cause high transactional costs. We see that disrupting projects should entail legislative changes and true reforms, but for that to happen, a mature concept is required. We will talk about a possible scenario in upcoming publications.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.

Oleksii Konashevych is a Ph.D. fellow in an international program funded by the EU government, Erasmus Mundus Joint International Doctoral Fellow in Law, Science and Technology. Currently, Oleksii is visiting RMIT and collaborates with the Blockchain Innovation Hub, doing his research in the field of the use of blockchain technologies for e-governance and e-democracy. Oleksii works on tokenization of real estate titles, digital IDs, public registries and e-voting on blockchain. Oleksii earned a master degree in law in 2005 and a master degree in economics in 2010. Before academic work, he practiced law in Ukraine for 10 years, holding senior positions. He participated in an initiative that worked on e-democracy reforms and became a co-author of the law on e-petitions, collaborating with the Presidential Administration of Ukraine as a manager of the e-Democracy Group.

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IMF Predicts Central Banks to Issue Digital Currencies

The IMF believes that some central banks are going to issue digital currencies, based on responses to a survey issued jointly with the World Bank.

The International Monetary Fund (IMF) believes that central banks may issue digital currencies in the future, according to a report by the IMF on June 27

According to the full paper, the IMF and World Bank conducted a survey on fintech that solicited answers from financial institutions within all member countries, and has based its conclusions in part upon the 96 received responses.

According to the paper, several central banks in different countries are considering implementing some form of Central Bank Digital Currency (CBDC). Uruguay has reportedly launched a CBDC pilot program already, while the Bahamas, China, Eastern Caribbean Currency Union, Sweden and Ukraine are “on the verge” of testing their systems.

Additionally, a number of central banks have reportedly been conducting research on CBDC’s potential impact on financial stability, the structure of the banking sector, entry of nonbank financial institutions, and monetary policy transmission. 

Motivation for offering a CBDC varies, per the report. Both emerging economies as well as developed economies are said to be considering CBDC options, with the latter seeking to provide an alternative to cash as its frequency of use dwindles. For emerging economies in developing countries, on the other hand, the main upshot of a CBDC would be reducing banking costs, as well as potentially making banks more available to unbanked citizens.

One similarity, however, is that most central banks are not interested in issuing an entirely anonymous CBDC, as the institutions want transactions to ultimately be traceable by authorities when necessary. However, some of these institutions are considering portioning off a subset of tokens reserved for large holdings and transactions, and only making those ones traceable.

As previously reported by Cointelegraph, the conservative economist Stephen Moore has recently joined a project to make a Federal Reserve-like entity for cryptocurrencies. The project, Decentral, is a purported attempt to regulate cryptocurrency supply in order to reduce volatility in the crypto market. 

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Ukrainian Delegation Visits Estonia to Learn About E-Government

A Ukrainian delegation led by an advisor to president met with Estonian authorities to get an expert evaluation of their e-government concept.

A Ukrainian delegation has visited Estonia to get an expert evaluation of their e-government concept, according to a statement one the website of the Administration of the President of Ukraine published on June 12.

Led by advisor to Ukrainian president Mikhail Fyodorov, the delegation met with Estonian authorities on June 10–11. The parties met to discuss future collaboration in the development of new technologies, as well as to get consultations about Ukraine’s govtech concept “Government in a Smartphone.”

Fyodorov stated that Estonia was the first government in the world that conducted digital elections and reached a 99% rate of services delivered online. The official claimed that the goal of Ukraine is to implement the most to-date and innovative technologies and approaches for their govtech concept.

According to the announcement, the delegation has carried out more than 10 meetings with major Estonian authorities, including representatives of the European Commission, Ministry of Foreign Affairs, Information Systems Agency, Estonia’s E-Governance Academy, and others.

The Estonian government has been actively applying blockchain technology in multiple services and administrations, claiming that they were the first country in the world that adopted blockchain tech in its production systems for ensuring the integrity of digital records and systems.

In 2016, Estonian authorities announced an initiative to deploy blockchain technology in healthcare records in partnership with United States data system service provider Guardtime. Estonia has also applied the technology to is e-residency programs and among public notaries.

Recently Cointelegraph reported that Estonia, along with the United Kingdom and Norway, will soon present the results of a blockchain pilot for digitizing government records of national archives.

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Binance DEX Will Geoblock Users From 29 Countries, Including the US

The decentralized exchange developed by Binance warns that it will block access from 29 countries.

The decentralized exchange (DEX) developed by major cryptocurrency exchange Binance will block access to users based in 29 countries. The DEX informs potential users of the restriction via a message that appears when accessing the platform from one of the regions.

The message appearing on the platform states:

“It seems you are accessing www.binance.org from an IP address belonging to one of the following countries:

USA, Albania, Belarus, Bosnia, Burma, Central African Republic, Democratic Republic of Congo, Democratic People’s Republic of Korea, Cote D’Ivoire, the Crimea region of Ukraine, Croatia, Cuba, Herzegovina, Iran, Iraq, Kosovo, Lebanon, Liberia, Libya, Macedonia, Moldova, Serbia, Somalia, Sudan, South Sudan, Syria, Venezuela, Yemen, or Zimbabwe.”

Pop-up when accessing the platform from within the U.S.

Pop-up when accessing the platform from within the U.S. | Source: binance.org

The pop-up also warns about how trading and accessing the wallet interface through the website will be blocked for users with IP addresses from the aforementioned countries.

Lastly, the message also links to a list of wallets supporting the Binance Chain (BNB) mainnet, suggesting them as alternatives for holding and managing the assets.

Binance has not replied to Cointelegraph’s request for comment on the move at press time.

Many in the crypto community characterized the finding as an indication that the DEX is in fact not decentralized. A Twitter user well known among crypto enthusiasts, Whale Panda, commented:

“Reminder that it was never a DEX so stop calling it a DEX. It’s just a word they used to pump $BNB, it was never meant to be decentralized.”

A Steemit post dedicated to the topic links to a list of suggested crypto asset trading platforms that do not require users to go through Know Your Customer procedures.

As Cointelegraph reported at the time, Binance launched its decentralized trading platform earlier than planned, in the second half of April.

Yesterday, June 1, Cointelegraph reported that the largest portion of traffic directed at crypto exchanges globally comes from the U.S., followed by Japan.

At the end of last year, Time reported that bitcoin (BTC) has a substantial liberating potential thanks, among other things, to the inability of authorities to control access to it.

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Ukrainian Man Faces up to 6 Years in Jail for Cryptojacking on His Own Websites

The Cyber Police of Ukraine have arrested a man who placed crypto mining malware on his own websites with 1.5 million monthly visitors.

Ukraine’s Cyber Police have arrested a man who allegedly placed crypto mining malware scripts on his own websites, local law enforcement reported on March 26.

The cyber crime unit of the national police of Ukraine arrested a 32-year-old man from the Bukovina region who allegedly placed cryptojacking software on a number of educational websites that he created and administered.

The unspecified websites and internet resources had 1.5 million monthly visitors, the police reported.

The police also stated that the installed malware on the websites was deploying visitors’ devices’ CPU and GPU power to illegally mine cryptocurrencies.

The authority has conducted a search in the house of the alleged cyber criminal and seized his computer equipment, bank cards, hard drives and notes for launched criminal proceedings. According to the report, the miner faces imprisonment for a term of up to six years.

Cryptojacking malware activity has seen tremendous growth recently, with cyber security firm McAfee Labs reporting in late December that the total instances of cryptojacking malware rose by more than 4,000 percent in 2018.

Recently, AT&T Cybersecurity reported that crypto mining is one of the most observed purposes of hackers that attack businesses’ cloud infrastructures. In late February, notorious online crypto miner firm Coinhive announced that the service is shutting down since it reportedly become economically inefficient.

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Ukraine’s Former Prime Minister Proposes to Tackle Corruption Using Blockchain

Ukraine’s former prime minister Yulia Tymoshenko, who is planning to participate in the 2019 presidential elections, wants to combat corruption using blockchain technology.

Ukraine’s former prime minister Yulia Tymoshenko, who is currently running a presidential campaign for the March 2019 elections, wants to tackle corruption using blockchain, according to a recent Facebook post from Sunday, Dec. 9.

Tymoshenko dedicated her post to International Anti-Corruption Day, stating that modern Ukraine is immersed in “total corruption.” She further explained that her party, the All-Ukrainian Union “Fatherland”, is trying to combat bribery.

The former prime minister mentioned blockchain technology as an effective tool for public administration. According to Tymoshenko, in order to prevent corruption, state registries should be stored on a blockchain.

Among other measures, she also urged to protect the country’s courts from the influence of politicians, to sue officials that accept bribes and to break monopolies. Tymoshenko has previously called blockchain the ideal technology for combating corruption when she presented at a forum in Kiev last June. She explained:

“Blockchain is a perfect anti-corruption technology, which is proven by international practice. In order to completely eliminate corruption in public registries and to protect each citizen’s personal data, we have to transfer all administration systems to blockchain.”

Tymoshenko was prime minister of Ukraine for the first time in 2005, and then again from late 2007 to early 2010. In June 2018, she announced her candidacy for President of Ukraine in the 2019 elections.

As Cointelegraph reported in August, the Ukrainian Electoral Commission held a decentralized voting pilot using 28 nodes on the NEM blockchain. Oleksandr Stelmakh, the head of the State Register at the Central Electoral Commission of Ukraine, said that they are “continu[ing] a series of experiments applying blockchain technology within electoral voting.”

The country is also considering the issuance of a state-owned digital currency, the e-hryvnia, which would be based on a blockchain and tied to the national fiat currency, the hryvnia. Proponents expect the national digital currency to increase the rate of non-cash payments and reduce their cost.

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Ukraine Electoral Commission Uses NEM Blockchain for Voting Trial

A member of Ukraine’s Electoral Commission revealed in an Aug. 7 Facebook post that they are working with NEM on a blockchain voting pilot.

Oleksandr Stelmakh, head of the State Register at the Central Electoral Commission of Ukraine, appeared pleased with the ongoing tests, writing in the post that they are “continu[ing] a series of experiments applying blockchain technology within electoral voting.”

Stelmakh noted that they created a test vote using 28 nodes with the NEM blockchain “several weeks ago,” adding that “voting is still open and anyone can take part it in.”

The trial, which came about as a result of a partnership with the local NEM Ukraine, exclusively involves a testnet with test NEM tokens “kindly given by a representative of the NEM Foundation in Ukraine,” Anton Bosenko.

On the basis of current rates, Stelmakh calculated the cost of installing blockchain voting in each police station in the country would be around the equivalent of $1,227 per implementation. He writes that this is a “small price to pay” in return for immutable vote data protection.

Ukraine is in the midst of finalizing its regulatory approach to cryptocurrency, with the country’s Financial Stability Council last month supporting the idea of treating digital assets like financial instruments. Despite its relatively low electricity costs, Ukraine nonetheless has no plans to regulate the informal mining industry, Cointelegraph reported.

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Ukraine Election Official Launches Voting Trial Using NEM's Blockchain

A member of the Ukraine Central Election Commission is investigating the use of blockchain in elections.

Oleksandr Stelmakh, working for Ukraine’s Central Election Commission, commented on the ongoing trial Tuesday by way of Facebook. The trial run began back in July when Stelmakh encouraged his friends on Facebook to participate in a “test vote” that had been created in partnership with a local NEM Foundation group, using NEM’s blockchain platform.

“One of the basic useful properties of the blockchain is the impossibility of making changes to the saved information …These are the properties we tried to use to save the information of the local ballot sessions,” Stelmakh wrote.

He added:

“It must be noted that the experiment was held in the test environment of the blockchain NEM and for the transactions used by the test coins that were kindly given the representative of the NEM Foundation in Ukraine, Anton Bosenko. The blockchain test environment has 28 nodes. “

Stelmakh also wrote that based on the results, it would cost roughly $1,227 to place a node which can be used to vote in each police station, which he said was a “small” price to pay for the technology.

Stelmakh reminded readers in his post that the trial period for the blockchain experiment was still ongoing and polls using “test coins” had not yet closed.

The official’s work represents the latest effort to apply the technology for tabulating votes, with the idea being that blockchain could be used to create an immutable record – or, at least, an auxiliary one – to help ease issues when tallying final counts. Blockchain has also been advanced as a tool for proxy voting, in which shareholders of a company vote on corporate matters.

Editor’s note: Comments in this article have been translated from Ukrainian. 

Vote image via Shutterstock

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Ukrainian Financial Stability Council Supports Regulatory Concept for Cryptocurrencies

The Financial Stability Council of Ukraine has supported a concept for crypto regulations, Timur Khromaev, head of the National Securities and Stock Market Commission (SSMCS) reported in a Facebook post July 20.

According to Khromaev, the concept involves recognizing cryptocurrencies and tokens as financial instruments, establishes the roles and functions of governmental bodies in regulating those instruments, in addition to licensing transaction participants, defining information disclosure conditions, and other factors.

The Financial Stability Council comprises of the Governor the National Bank of Ukraine, the Minister of Finance, heads of the National Securities and Stock Market Commission and the National Commission for State Regulation of Financial Services Markets, and Managing Director of the Deposit Guarantee Fund. They are tasked with detecting and minimizing risks to the stability of the national financial and banking systems. Decisions made by the council are recommendatory.  

Khromaev commented that the move is “an important first step in building a consensus among government agencies and financial regulators,” which confirms the commitment to cooperate with the Verkhovna Rada of Ukraine on the development of legislation and a regulatory framework for cryptocurrencies. The NSSMC head added that the framework aims to ensure transparency and a high level of interaction between “investors and crypto market participants.”

The concept of recognizing cryptocurrencies as a financial instrument was suggested by the NSSMC in May, 2018, with Khromaev emphasizing the necessity of legal recognition of cryptocurrencies and adapting the position of financial regulators. According to Khromaev, the developing crypto industry has caused the crypto market to become an “integral part of economic and financial relations.”

Last month, the State Special Communications Service of Ukraine, revealed that it is not planning to regulate cryptocurrency mining. In response to a request for information by the Better Regulation Delivery Office’s (BRDO), the agency said that they have no intention to introduce licences for crypto mining, which would classify it as a special kind of activity.

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Ukrainian Authorities Are Not Planning to Regulate Crypto Mining

The State Service for Special Communication and Information Protection of Ukraine has said that it is not planning to regulate cryptocurrency mining, news portal cryptorussia.ru reported June 25.

In response to an official request for information by the Better Regulation Delivery Office’s (BRDO), the representatives of the regulatory authority reportedly said that they have no intention to introduce licences for crypto mining as a special kind of activity. The BRDO is an organization that promotes economic freedom and efficient regulations in Ukraine.

BRDO official Igor Samokhodski said that miners are trying to avoid publicity due to the uncertain status of cryptocurrency and unpredictable reaction of the authorities. According to the BRDO, mining still carries significant risk in Ukraine, as crypto companies face the possibility of major fines or having their equipment confiscated.

According to a local poll earlier this year, 72 percent of Ukrainians who use the internet know what cryptocurrency is, while 13 percent of such respondents own some form of cryptocurrency. 41 percent of respondents said authorities should support the legalization of crypto, while 19 percent thought it should be banned outright.

Last month, Cointelegraph reported that Ukraine was preparing draft legislation to legalize cryptocurrencies. According to the document, the country’s authorities say the legislation would develop a “free and transparent” digital asset market in Ukraine. While the paper outlines rules for storing, using, and exchanging cryptocurrencies and smart contracts, it also  proposes regulatory measures for preventing the use of crypto for money laundering, terrorist financing, and other criminal activities.

In May, the Ukrainian National Securities and Stock Market Commission announced that it will consider recognizing cryptocurrencies as a financial instrument. The head of the commission, Timur Khromaev, suggested that crypto assets and operations should be considered within existing legal frameworks on the basis of the principles behind the asset. He said that new rules and regulations for cryptocurrencies will be defined on a national level as “it is still a long way off [for] international standards.”