Ukraine is actively working to create a legal framework for cryptocurrencies
The authorities are looking for an opportunity to make money on new technologies
Experts and users of cryptocurrency are involved in the development of laws
International consortium of news organizations developing transparency standards.
While the chairman of the Central Bank of the Russian Federation Elvira Nabiullina and the Ministry of Finance of the Russian Federation continue to argue that Russia does not need a national cryptocurrency (CBDCBills and coins may be a thing of the past due to a new financial instrument – central bank digital currencies (CBDC). As … More), Ukraine has developed and successfully tested a digital version of the hryvnia. In order to understand the initiative and find out at what stage the crypto project of a neighboring country is, the editorial staff of BeInCrypto has collected all information about it in one material.
From the USSR to high technologies
Ukraine’s special position in the global financial arena is partly shaped by a combination of European influence and the legacy of Soviet times. After the collapse of the USSR, the country’s economy has faced difficulties more than once. Despite the problems, Ukraine has managed to maintain its desire to become an outstanding financial and cultural center of Eastern Europe.
The country’s position on the world stage in 2013-2014 was shaken against the background of citizens’ disapproval of the actions of the authorities and disputes over the delimitation of the territory with Russia. The conflict, among other things, led to a drop in the economic indicators of Ukraine. In 2013, Moody’s analysts downgraded the country’s credit rating to Caa1 (low quality and very high credit risk).
Moody’s 2013 rating
In 2015, the country’s GDP showed positive values for the first time in a long period of time. Despite this, the Ukrainian hryvnia, paired with the US dollar, has continued to move sideways since 2016.
USD / UAH trading pair chart. Data: Investing
In order to change the position of Ukraine in the world arena, the country’s authorities decided to consider the possibilities of new technologies. In particular, regulators drew attention to the potential for issuing a national cryptocurrency and the use of blockchain.
Ukraine’s path to the crypto space
Ukraine occupied a special position on the map of the world crypto community due to the fact that in 2016 the country’s authorities announced their intention to create a national cryptocurrency (e-hryvnia).
Ukrainian regulators believe that a number of advantages can be achieved with the help of digital currency. For example, the crypto format of transactions will reduce the cost of transferring funds and simplify the process of sending money across the border. Also, the Ukrainian authorities believe that the development of a national cryptocurrency and the development of a blockchain will open up an opportunity for the country to strengthen its position in the financial field of Eastern Europe..
During the work on the national crypto project, local regulators presented a roadmap for its development. Subsequently, the document was repeatedly amended, which, among other things related to the timing. Despite a number of changes, the financial regulator has successfully completed testing the e-hryvnia. The pilot launch of the project was carried out in the period from 2018 to 2019.
Fragment of the first version of the roadmap for the development of a crypto project in Ukraine
According to employees of the Ukrainian Central Bank, e-hryvnia is a payment token As the use of cryptocurrencies grows, new types of tokens appear. They can represent value or something intangible like voices. Two … More. The technical features of the financial instrument in one of his interviews were explained by the adviser to the head of the Association of Ukrainian Banks Oleksiy Kushcha. According to him, e-hryvnia will be kept in bank accounts. At the same time, the blockchain will ensure the safety of funds and the legality of operations..
E-hryvnia is not the only crypto project that can be launched on a national scale. In 2017, when the financial regulator announced the development of a national cryptocurrency, the founder of the Ukrainian cryptocurrency exchange Kuna, Mikhail Chobanyan, proposed an alternative digital asset based on Ethereum – cryptogrivna. According to the idea of the authors of the initiative, the coin will become the first stablecoin in Ukraine.
In November 2018, the Kuna developers announced their readiness to launch the project. Beta testing of the digital asset started at the end of February 2020. At the time of this writing, there is no information on the official release date of Cryptogrivna..
Screen of the page of the crypto project Kuna
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How the crypto industry in Ukraine has changed
Over the past two years, there have been many changes in Ukraine that are related to the development of the crypto industry in the country. The progress of the past two years can be summarized as follows:
- 24 February. National Bank of Ukraine completed testing of digital hryvnia.
- June 5. National Bank of Ukraine presented the results of testing the national cryptocurrency.
- August 28. Representatives of the Ministry of Digital Transformation of Ukraine announced their intention to legalize cryptocurrencies in the country.
- The 20th of October. The Verkhovna Rada signed a blockchain memorandum. The document reveals the steps by which the country will carry out digital transformation.
- 22 of October. Ukraine has presented bills to regulate the cryptoindustry.
- 15th of November. The Verkhovna Rada has registered a draft law on taxation of cryptocurrencies.
- November 26. Ukraine introduced criminal liability for illegal profit using cryptocurrencies.
- December 6. Deputies of the Verkhovna Rada of Ukraine adopted a bill on the implementation of FATF norms. The document regulates the rules that regulators must adopt to prevent money laundering and terrorist financing using cryptocurrencies.
- 20th of December. The Ministry of Digital Industry and the Parliamentary Interfactional Association Blockchain4Ukraine Determine the Legal Status of Cryptocurrencies in Ukraine.
- January 24. The State Financial Monitoring Service was instructed to find out the origin of cryptocurrencies of citizens of the country.
- January 31st. The State Service for Special Communications and Information Protection of Ukraine has shared with the media information about the creation of a blockchain based on local cryptographic developments. According to representatives of the organization, the project can, among other things, be used for voting and issuing a national cryptocurrency.
- February 8. The Ministry of Digital Transformations of Ukraine came to the conclusion that there is no need for a legislative framework for mining in the country.
- February 22. The National Bank of Ukraine presented the results of testing the digital hryvnia in front of the financial regulators of other countries.
- 25 February. MVP (Minimum Viable Product) of digital hryvnia appeared on the network.
- March, 3rd. Representatives of the Ukrainian National Agency for the Prevention of Corruption (NAPK) have published the procedure for declaring cryptocurrencies, according to which bitcoin is an intangible asset.
- May 18. Ukraine introduced the law “On virtual assets”.
- May 19. National Bank of Ukraine recognizes operations with cryptocurrencies as high-risk.
- May 20. The Cabinet of Ministers of Ukraine agreed to discuss the possibility of mining cryptocurrencies at Ukrainian nuclear power plants. Previously, the issue was studied at the Ukrainian State Enterprise “Energoatom”. Recall that a similar proposal was put forward by the President of Belarus Alexander Lukashenko.
- June 11. The Verkhovna Rada of Ukraine introduced a draft law “On virtual assets”.
- July 11. The Ministry of Digital Transformation of Ukraine signed an agreement with the Association “Blockchain of Ukraine” (BAU) on joint work on the formation of tax laws for the crypto industry.
- July 20. The National Bank of Ukraine presented a strategy for the development of the fintech industry in the country until 2025. The document regulates standards for open banking, blockchain projects and big data.
- July 23. Representatives of the Ministry of Digital Transformation of Ukraine spoke about their intention to organize financial monitoring in the country. For this, the regulator signed a memorandum with the Crystal Blockchain analytical service.
At the time of this writing, Ukraine still has a chance to become one of the first countries whose regulators have issued national cryptocurrencies. China is the closest to being a leader in the transition to fiat crypto. Learn all about the national cryptocurrency of the PRC from our material.
Read also: The transformation of the dollar – the history of the development of the US national cryptocurrency
To the conclusions
While regulators in other countries refuse to create a digital version of fiat, two crypto projects have appeared in Ukraine. How will they interact, and will local authorities allow stablecoins to be launched? Stablecoins – literally translated from English – “stable” coins – continue to gain popularity in the digital asset market. With … More private exchange nationally – unknown. Despite this, if Ukraine needs to respond to the launch of the digital yuan, the country will have two projects at once. To other conclusions:
- The country’s authorities are actively working on the formation of a legal framework for cryptocurrencies and blockchain projects.
- Local regulators are considering non-standard solutions that open up additional income opportunities for the country. For example, the use of surplus nuclear electricity for mining cryptocurrencies.
- The country’s authorities are involved in the development of laws for the crypto space of its representatives who can lobby the interests of users at the government level.
You can find out about the attitude of the Russian authorities towards cryptocurrency and the evolution of laws on digital assets in the Russian Federation from our review.
All information contained on our website is published in good faith and objectivity, and for informational purposes only. The reader is solely responsible for any actions he takes based on the information received on our website..
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