Legal Position on Cash-to-Crypto Operations in Ukraine

Lions Lawyers continues to actively represent and defend participants of the cryptocurrency market in Ukraine, including operators of cash-to-crypto devices (commonly known as Bitcoin ATMs).

We emphasise that the qualification of such activities as the provision of regulated payment services is legally incorrect and contradicts both the Law of Ukraine “On Payment Services” and the actual operational model of these businesses.

Under Ukrainian law, payment service providers are entities that maintain users’ payment accounts, hold or safeguard client funds, execute payment transactions, transfer funds between payers and recipients, or act as intermediaries in payment instructions. None of these constitutive elements are present in the cash-to-crypto model.

Bitcoin ATMs do not open or maintain user accounts, do not hold client funds, and do not enable users to dispose of funds after a transaction. Cash inserted into the device does not create a deposit, stored balance, or ongoing legal relationship. Instead, the transaction represents an immediate, one-time exchange: cash is instantly converted into a specified cryptoasset and transferred directly to the wallet address designated by the customer.

Accordingly, the legal relationship arising from such transactions is that of a seller and buyer, not payer and payee mediated by a financial intermediary. No transfer of funds between third parties occurs, and no payment orders are executed on behalf of clients.

We further note that mechanical application of regulatory approaches designed for custodial crypto exchanges or account-based platforms to non-custodial cash-to-crypto devices is legally and functionally flawed. The absence of payment accounts and fund custody precludes classification as a licensed payment service provider.

At the same time, operators in this sector fully comply with Ukrainian anti-money laundering legislation as obliged entities in relation to cryptoasset transactions. Robust KYC, risk-based monitoring, transaction analysis, and reporting procedures are implemented in line with financial monitoring requirements and National Bank of Ukraine guidance.

Enforcement measures based on incorrect legal qualification — including equipment seizures — raise serious proportionality and rule-of-law concerns, as they interfere with the constitutional freedom of entrepreneurial activity without proper statutory grounds.

Our firm remains committed to protecting innovation-driven businesses, ensuring regulatory clarity, and safeguarding lawful cryptocurrency operations in Ukraine.