Key takeaways:
- The Stellar Development Foundation announced today that an electronic version of the hryvnia, Ukraine’s national currency, will be piloted using the Stellar blockchain.
- The pilot, which is being run by Bitt and TASCOMBANK, will be overseen by the country’s central bank, with the Ministry of Digital Transformation’s support.
- “This pilot project will serve as a technological basis for the issuance of electronic money” said the Deputy Minister of Digital Transformation Oleksandr Bornyakov
One of Ukraine’s oldest commercial banks, Tascombank, is starting a Stellar-based trial project for the hryvnia, the country’s native fiat currency. On December 14, the Stellar Development Foundation (SDF) announced a private electronic hryvnia pilot project by Tascombank and Bitt.
Under the National Bank of Ukraine and with the help of the Ministry of Digital Transformation, the electronic hryvnia is being tested (MDT).
The pilot project will provide “the technological basis for issuing cryptocurrencies,” according to MDT deputy minister Oleksandr Bornyakov, and is an “important next step in promoting payment infrastructure and finance innovation in Ukraine.”
The experimental work has already begun, according to Denelle Dixon, CEO of SDF; the practical work has already started, with the first attempt to include a programmable payroll for employees of Diia, a public IT solutions company run by Ukraine’s MDT.
“This regulated electronic hryvnia will be privately issued electronic money based on blockchain technology, built-in accordance with current Ukrainian electronic money legislation,” Dixon explained.
The pilot is sponsored by Ukraine’s Ministry of Digital Transformation, according to Valeriy Danilenko, Tascombank’s deputy chairman for e-commerce, and all “e-money activities” by the commercial bank is regulated by the central bank NBU. The electronic hryvnia will be constructed under Ukraine’s existing e-money regulations, according to the statement, with the pilot expected to begin in 2022.
Central banks are ramping up their study and experiments of digital currencies around the world (CBDC).
Around 80 countries are actively studying digital currencies supported by central banks, according to the Atlantic Council’s CBDC tracker. Nigeria debuted the eNaira in November, reportedly receiving around 500,000 wallet downloads in the first three weeks. The European Central Bank began a two-year trial of a retail CBDC, which may be used by customers to make or receive payments, in October.
Ukraine has been building the framework for the launch of an electronic hryvnia as well. The country’s parliament passed a payment methods law in early July that included a potential CBDC in the same category as cash or electronic money. President Volodymyr Zelensky signed a bill allowing the NBU to issue CBDCs into law in late July.
The initiative’s goal is to put electronic money issuance on an open blockchain to the test. Tascombank is in charge of developing and testing the Stellar-based electronic hryvnia for use on Bitt’s transaction network, the Digital Currency Management System, or DCMS.
In Ukraine, both citizens and politicians are interested in cryptocurrency. According to a September 2020 report by blockchain analytics firm Chainalysis, Ukraine has the world’s highest cryptocurrency usage rate. The government also established the Ministry of Digital Transformation in 2019, with the goal of promoting digital literacy and internet access.
Bitt CEO Brian Popelka stated, “Bitt’s DCMS will provide Tascombank with all of the technology necessary to securely mint, store, dispense, distribute, and redeem electronic hryvnia.”
The SDF will enable Tascombank to “configure its asset control needs while maintaining the interoperability and flexibility of an open ledger,” according to Dixon.
The Ukrainian government has been examining Stellar in preparation for the implementation of digital currencies. MDT first partnered with SDF in January 2021 to create a digital asset strategy and digital currency infrastructure for central banks.
“We continue to provide input and guidance to MDT for their strategic work,” Dixon said, adding that the e-hryvnia experiment is a separate workflow.
