President of Ukraine Volodymyr Zelenskyy signed the Law on Payment Services; which will allow the country’s National Bank to issue its own national digital currency (CBDC). A recent study showed that the country’s financial sector hopes that the e-hryvnia will facilitate transactions in the crypto sector. We also note that the law allows the regulator to launch a regulatory sandbox; within which tools and services based on innovative technologies will be tested. The corresponding message posted on the website of the Ukrainian leader.
The Ministry of Digital Transformation of Ukraine has already entered into a partnership with the Stellar Development Foundation to jointly develop the digital hryvnia infrastructure.
The Ukrainian National Bank expected to issue a digital currency by 2024.
By May 2024, the authorities want to ensure that at least 10% of the business tokenize assets or use tokenized assets in their activities. The Ukrainian authorities expect that by this time 47% of the country’s residents will use virtual assets. At the same time, Ukraine itself should get into the top 10 countries with its own cryptocurrencies.
The law will promote the implementation of innovations in the financial sector of Ukraine
It is expected that the law will contribute to the modernization; further development of the payment services market and will contribute to the introduction of innovations in the financial sector of Ukraine.
Also, the document adjusts local legislation to the legal framework of the European Union. Which in the future will allow integrating the payment system of Ukraine into the pan-European one.
The bill adopted by the Verkhovna Rada on June 30 this year. Among other things, the document distinguishes between the concepts of “national digital currencies” and “electronic money”.
In addition, the law creates conditions for the introduction of the concept of open banking in Ukraine. Which should unite various payment service providers and technological platforms into a single payment ecosystem. It is planned that Open banking will start operating in Ukraine in 2023. The document will enter into force the next day after publication. And most of the provisions will take effect 12 months later.
Last year, the Ukrainian parliament passed the Law on Virtual Assets. The document regulates operations with cryptocurrency in the country, classifying them as intangible goods. The National Bank of Ukraine began to force regulation after the Verkhovna Rada presented an updated text of the draft law “On virtual assets”. In the new version of the bill, cryptocurrencies are classified as an intangible good. At the same time, cryptocurrency exchanges and exchangers required to verify their clients through the “Know Your Client” (KYC) procedure.
The idea of creating a digital currency is becoming popular in many countries
At the end of June, the Central Bank of Russia announced that the digital ruble would appear in 2022. In January, testing of the platform will begin with the participation of the largest Russian banks – Sberbank, VTB, Tinkoff Bank, Promsvyazbank, Gazprombank and Alfa-Bank. Thus, the digital ruble will become the third official means of payment in the country along with cash and non-cash money.
Although earlier the Public News Service reported that most Russians are not ready to receive wages in digital rubles. 41% of workers expressed their categorical disagreement with the introduction of the new format.
In addition, there are potential risks inherent in the state cryptocurrency; despite its many benefits, not known how the introduction of the government stablecoin might affect the traditional banking system.