Ukraine Bank Launches CBDC Pilot Built on Stellar Lumens Blockchain

December 16, 2021, 9:45 AM AEST - 7 months ago

A recent announcement by the Stellar Development Foundation (SDF) has revealed that the Stellar blockchain will be used to pilot an electronic version of the hryvnia, Ukraine’s national currency. In addition to September’s news of the country legalising cryptocurrencies, Ukraine appears to be gradually embracing the entire digital asset ecosystem.

Stellar Partners with Fintech Firm and Ukraine Bank

The CBDC pilot will be carried out by global fintech firm Bitt and one of Ukraine’s oldest banks, TASCOMBANK. The project will be overseen by the country’s central bank, with additional oversight from the Ministry of Digital Transformation.

As part of the project, an electronic hryvnia will be issued on the Stellar blockchain. One of the main tests will be use cases for “programmable payroll for public employees at Diia, an IT solutions enterprise, as well as for peer-to-peer payments and merchant payments”.

Oleksandr Bornyakov, deputy minister of Digital Transformation of Ukraine, noted:

This pilot project will serve as a technological basis for the issuance of electronic money, and is the next key step to advance innovation of payment and financial infrastructure in Ukraine.

Oleksandr Bornyakov, deputy minister of Digital Transformation of Ukraine

Build It, Test It, and It Will Come

The stated objective of the project is to “pilot the issuance of electronic money on an open blockchain with asset-control capabilities for issuers”.

TASCOMBANK will build and test the regulated electronic hryvnia on Stellar, which will be deployed on Bitt’s digital currency management system. Part of Stellar’s appeal, according to Bitt CEO Brian Popelka, is its “many benefits, including greater flexibility that aligns with the electronic hryvnia’s specific needs”. Volodymyr Dubey, TASCOMBANK’s chairman of the board, was similarly optimistic about the project’s prospects, saying:

With the rapidly growing impact of virtual assets on our everyday life and economic landscape, it is essential to utilise the advantages of blockchain technology and new related products as a part of the bank’s long-term market strategy. Electronic currency paves the way to more sophisticated products in the virtual assets field that we are excited to explore.

Volodymyr Dubey, chairman of the board, TASCOMBANK

Stellar Making Strides

Earlier this year, the Stellar Foundation announced a partnership with Moneygram and USDC as part of its move into the global remittances space. Now, its ambitions have expanded into central bank digital currencies (CBDCs) with its CEO and executive director expressing great confidence that its blockchain is up to the task.

Stellar is an open network that was designed with asset issuance in mind, and is uniquely suited to assets like the electronic hryvnia. It offers issuers, like TASCOMBANK, a suite of controls that they can configure for their asset control needs while maintaining the interoperability and flexibility of an open ledger.

Denelle Dixon, CEO and executive director, Stellar Development Foundation

This regulated electronic hryvnia will be built under the current e-money legislation of Ukraine, and the payment services law governing the circulation of electronic money and future issuance of a digital currency is anticipated to take effect in 2022.

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