A digital currency can now be officially issued by the National Bank of Ukraine since it has been authorized to do so by the Ukrainian government.
A recent announcement further disclosed that president Volodymyr Zelenskyy signed a law titled On Payment Services, allowing the country's central bank to issue the digital hryvnia, the country's CBDC.
Under the new law, the National Bank of Ukraine will be able to set up regulatory sandboxes for testing emerging technologies that will be used for the testing of payment services.
Announcing the new legislation, it is also stated that the Ukrainian central bank will work closely with local start-ups on the payment market, keeping in mind the needs of the private sector.
In late June, the Ukrainian parliament approved On Payment Services, which aims to implement open banking, the practice of sharing access and control to consumer financial information with third parties.
Fintech companies will be able to establish more thorough cooperation with banks and gain more opportunities for business as a result of this new law.
According to the announcement, the newly signed law is also intended to align Ukrainian legislation with the legal framework of the European Union, which will eventually lead to the country's payment system being integrated with the EU's.
The legislation, including the Payments Service Directive 2 and the E-Money Directive, is based on contemporary requirements that adhere to European regulatory standards.
According to a previous report, the Ukrainian central bank has been investigating the possibility of issuing a digital currency for several years, showing the potential for a CBDC to increase public confidence in its services.
Nevertheless, the bank was concerned about the threat to the traditional banking system and the implications on financial stability.
Ukraine's Ministry of Digital Transformation partnered with the Stellar Development Foundation earlier this year to develop a strategy for crypto assets and CBDC infrastructure.