Recent legal proceedings in Ukraine have outlined requirements for enhanced communication between the National Bank of Ukraine and private payment companies. The Payment Services Law considerations raised, have led to plans for an official Central Bank Digital Currency (CBDC), with proposals set to advance.
The National Bank of Ukraine (NBU) has formally authorised the plan to create the Hryvnia’s digital counterpart. Ukrainian President, Volodymyr Zelenskyy, was instrumental in bringing the proposal into fruition with a signatory. The central bank gives the nation a digital currency that functions similarly to a stable coin such as Tether (USDT) or USDCoin (USDC) if you invest in cryptocurrency with the major difference being that the CBDC has the governments treasurer orchestrating the protocol as its central authority.
Regulatory bodies and development sandboxes are being prepared for testing the payment service and its systems. Reportedly the CBDC is being closely monitored and procured under the Nation Bank of Ukraines’ guidelines. The On Payment Services Act aims to introduce open banking procedures. Open banking provides transparency and control over customers financial information, which is managed through third-party applications. The government introduced the law to encourage the development of financial technologies (Fintech) nationally. The legal authorisation and subsequent adoption of this niche industry allows private fintech companies to collaborate with banks and expand their business potential. Unlike cryptocurrency, CBDCs are regulated and held in banks adversely to Cryptoassets that are typically held in a hardware or software wallet application.
According to the release, the new law is there to develop Ukrainian regulations to the legalities of the European Union, which would eventually allow integration of Ukraine’s payment system with the EU’s.
The new law is in place to develop its national fiscal infrastructure and economy. However, the implications of the law are hoping to surpass legalities that will enable the integration of Ukraine’s payment systems with the European Union.
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