Ukraine: Bitcoin protocol is sufficient to regulate on-chain activities, and mining does not require government supervision and intervention

Ukraine's Ministry of Virtual Assets, Digital Reform and the Commission have just released the world's most sound public blockchain and PoW mining regulatory policies. This is probably the most forward-looking crypto mining regulatory policy in the world.

These regulators believe that the Bitcoin protocol and the consensus rules implemented are sufficient to regulate the activities on the chain, because the rules of the network are enforced by the consensus of the protocol itself, the node operators, and the users themselves. It does not require government supervision or intervention.

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Ukrainian officials understand that blockchain technology is self-regulating. Its use of open source protocols and open network portals enables privacy and free movement of assets, and is protected by decentralized networks, cryptography, PoW, and social consensus.

Ukrainian officials no longer focus on micro-management and excessive regulatory requirements, but instead focus on formulating national policies in areas such as digitalization, the digital economy, digital innovation, electronic governance and electronic democracy, and the development of the information society.

Ukraine's regulatory policy is trying to promote the development of virtual assets, blockchain and tokenization, artificial intelligence and other technological innovations, while developing a regulatory sandbox.

The document mentions:

"We will promote the interaction between the financial and virtual asset markets and their effective development. We will promote international best practices for the taxation of virtual asset operations and virtual asset service provider activities. We will establish effective mechanisms to prevent businesses and Abuses and misconduct by law enforcement agencies. We will establish interactions between enforcement agencies that deal with virtual assets and service providers that use virtual assets. We will provide technology, tools and operations for the entire virtual asset market, especially among state agencies Contribute to the development of educational processes based on principles. "

Such a policy is refreshing and shows that Ukrainian officials are actually very knowledgeable about unlicensed and open public blockchains.

Most cryptocurrency regulations are unsuccessful attempts to micro-manage self-regulating activities using public blockchains and use outdated strategies from traditional financial systems.

The FINCEN (Financial Crimes Enforcement Network) rules on the business travel of cryptocurrency companies are a typical example. It will only bring costs and regulatory burdens to start-ups, not even anti-money laundering and crime prevention.

Ukraine's adoption of such a leadership stance, rather than stifling innovation, deserves praise. Seattle, the United States, is another example of outdated regulations that require higher electricity bills from miners and various measures to make mining startups difficult.

Perhaps the worst case of regulation is Bitlicense in New York, a regulation that is too harsh, leading to the loss of a large number of startups, and believes that the United States environment is not conducive to innovation.