Ukrainian National Bank Might Launch State-Owned Cryptocurrency ‘e-hryvnia’

A report by local media outlet Vesti Ukraine has revealed that the National Bank of Ukraine (NBU) is considering the possibility of launching a state-backed cryptocurrency which would be controlled by the NBU.

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A report by local media outlet Vesti Ukraine has revealed that the National Bank of Ukraine (NBU) is considering the possibility of launching a state-backed cryptocurrency which would be controlled by the NBU.

NBU could launch e-hryvnia or hryvnia

The bank has revealed that the cryptocurrency would be called the e-hryvnia and would be centralized to ensure that the government is in control of the cryptocurrency, with the crypto created to increase the amount of non-cash payments in the country.

Bank officials revealed that the e-hryvnia would be pegged to the hryvnia, country’s fiat currency, at a rate of 1:1 to avoid inflation.

Bank officials revealed that the cryptocurrency was still far from ready, noting

“THE DECISION ON THE APPROPRIATENESS OF THE INTRODUCTION OF ELECTRONIC HRYVNIA IN FULL WILL BE TAKEN ONLY AFTER A DETAILED ANALYSIS.”

Advisor of Ukrainian Bank Association, Alexey Kustch, stated that the e-hryvnia is a cryptocurrency unlike any other currently available in the market.

Authorities are confident that the cryptocurrency would receive a remarkable turnover since it will offer more security than decentralized cryptos while still making use of the blockchain’s faster transaction processing.

He added that developing a state-owned cryptocurrency making use of blockchain technology could be a very good move for the government:

“On the one hand, it will protect human rights in terms of property, and on the other —  significantly reduce the costs and time of transactions, as well as accelerate the turnover of money in the country.”

The bank revealed that the launching of the cryptocurrency could only be done after they have conducted an in-depth analysis of the coin and what effects it could have on the country’s financial system.

The Ukrainian government has been considering cryptocurrencies as a possible solution for a while now as it continues to build its “Cashless Economy” framework.

The Ukrainian parliament is currently still debating a tax on crypto assets, with the current suggested rate being 5% on individuals trading crypto and 18% of all crypto profits.

Central bank cryptocurrencies considered by some countries

Ukraine isn’t the only country considering state-backed cryptocurrencies. Neighboring Russia has been looking into the possibility of launching a state-backed cryptocurrency of their own, called the CryptoRuble, since the start of the year.

In May, the Bank of England released a working paper on central bank-backed cryptocurrencies, concluding that the models studied so far would not have a negative effect on private credit or on total liquidity provision to the economy.

The central bank in Norway also released a working paper on state-owned cryptocurrencies while Switzerland has been looking at the risks and opportunities of developing a state-backed cryptocurrency dubbed “e-franc”.

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