Ukraine Could Soon Develop its Own Cryptocurrency Known as e-Hryvnia

Ukraine could soon launch to the market a new cryptocurrency that would be known as e-Hryvnia. According to Anton Drannik, a journalist from Ukraine, the National Bank of Ukraine (NBU) is planning a centralized and government-backed virtual currency. It is important to mention that it will work using blockchain technology and will represent the local fiat currency, the Hryvnia.

It seems that Ukraine is analyzing the possibility to release to the market a national cryptocurrency. One of the main intentions behind it is to unload the cash market into a digital form.

At the moment, the country is experiencing some issues with cash. Several hackers attack banks and their servers causing ATMs to go offline and slowing down some payment options. The Ukrainian banking system is dominated by different banks from Russia, the European Union (EU) and Ukraine.

The e-Hryvnia may be a very good solution to avoid problems with payment transparency and safety. That would clearly increase security and transparency at the time of processing payments.

Furthermore, producing banknotes and coins is a costly process that could be enhanced by using a cryptocurrency. With this new solution, citizens will be able to pay at a store or supermarket using their mobile phones.

However, there is a problem. As the e-Hryvnia will be the digital version of the local currency, it will not protect users against inflation. At the moment, Ukraine is one of the countries with the highest inflation in the world and the Hryvnia has been severely damaged after the international conflict Ukraine experienced in 2013.

Nonetheless, there are no certain dates for this e-Hryvnia to be released, and it seems that it could just be a dream project.

Alexei Kush, Advisor to the head of Ukrainian Bank Association, said that there are several countries that are analyzing the possibility to issue a local cryptocurrency. Moreover, he explained how the virtual currency would operate and the benefits associated with it.

About it, he mentioned:

“Such national currencies are now in development in many other countries. The currency circulation in the country now consists of two spheres: cash and virtual cash. […] Using the blockchain technology we can set up a third form-digital money. They will be accountable using bank accounts, but the coins are held on usual crypto-style addresses.”

Additionally, users will be able to protect human rights and private property. At the same time, citizens would shorten the usual transaction time and cost.

Ihor Lvov explained that this local cryptocurrency would not have anonymity features and that it will not be a speculative financial asset. Mr. Lvov explained that citizens do not currently care about how users pay for goods, but instead, they want to arrive at the end of the month with enough money to pay for all their needs.

Ukraine is also planning to impose taxes on cryptocurrencies and crypto-related investments. Users will have to pay 5% of all the earnings in cryptocurrencies until December 31st 2024. After this date, the tax rate would increase to 18%.

Other countries such as Norway, the United Kingdom, Sweden and Canada have also been evaluating the possibility to adopt a central bank digital currency (CBDC). Most of them agree that there are not enough investigations about the effects that these currencies would have in the economy and in the society.

For example, Sweden’s cryptocurrency would be powered by IOTA and would help the country continue its path towards a cashless society. Norway, instead, wants to create its own cryptocurrency to ensure an efficient and robust payment system.

As long as cash usage declines in several countries, a CBDC could be a good alternative to ensure confidence in money and the monetary system as a whole.