The Ministry of Digital Transformation of Ukraine has partnered with the Stellar Development Foundation to work on a strategy for virtual assets in the country.
According to a Jan. 4 announcement, the Ministry of Digital Transformation of Ukraine and the Stellar Development Foundation signed a Memorandum of Understanding and Cooperation aimed at jointly developing a local digital asset ecosystem. The ministry’s Deputy Minister for IT Development Oleksandr Bornyakov commented :
“The Ministry of Digital Transformation is working on creating the legal environment for the development of virtual assets in Ukraine. We believe our cooperation with the Stellar Development Foundation will contribute to development of the virtual asset industry and its integration into the global financial ecosystem.”
Bornyakov explained that the cooperation aims to develop the infrastructure for a Ukrainian central bank digital currency (CBDC). He pointed out that “most of the world’s leading countries are developing their own national digital currencies” and said that Ukraine’s central bank has been researching them since 2017.
Bornyakov argued that the move towards a digital currency showed that the country—divided by a Russian-backed separatist movement—is able to keep up with the latest financial innovations.
“The National Bank of Ukraine has been researching the possibility of CBDC implementation since 2017,” he said. “It demonstrates Ukraine’s movement towards one of major financial trends. At the Ministry, we aspire to ensure our country’s adaptation to technological innovations and competitiveness in the financial market in Eastern Europe.”
Stellar Development Foundation CEO and Executive Director Denelle Dixon suggested that “digital assets and national digital currencies are one of the most important innovations of our lifetimes.”
Furthermore—as part of the collaboration—she said that the foundation is looking “forward to working with the Ministry and other stakeholders to digitize the hryvnia, to bring Stellar-based tools and services to the people and businesses of Ukraine, and to introduce new partnership opportunities in Ukraine to businesses in the Stellar ecosystem.”
The Ministry and the Stellar Development Foundation will also work together to develop and implement regulations covering the use and circulation of stablecoins in the Ukraine, a particularly contentious subject.
Ever since the Facebook founded the Libra stablecoin project—recently renamed Diem—made the prospect of a global stablecoin a real prospect, it has been the crypto asset type most heavily scrutinized and regulated by both governments and international financial organizations.
As Modern Consensus reported in July, the Financial Action Task Force (FATF) called for a global clampdown on ‘so-called stablecoins’ and warned that they have a “propensity for mass adoption makes them more vulnerable to be used by criminals and terrorists.”
In late September, the European Central Bank also claimed that during a financial panic, a “stablecoin run” could cause damage that would quickly spread into the traditional banking and financial system, leaving regulators and central bankers with few tools to calm investors and bank customers.