President Volodymyr Zelensky has signed a law that will allow the National Bank of Ukraine to issue its own digital currency. The new law, which aligns Ukrainian regulations with EU rules, will also tighten certification requirements for customers of payment service providers.
New law allows Ukrainian Central Bank to issue digital currency
Ukraine’s President Volodymyr Zelensky has signed legislation “On Payment of Services”, which was adopted by the Ukrainian parliament on June 30, the presidential administration announced this week. The purpose of the law is to “modernize and further develop” the payment services market and to promote the introduction of innovations in the financial sector. Press release telling.
One of the bill’s provisions gives the National Bank of Ukraine (NBU) the power to issue its own central bank digital currency (CBDC) The authorities in Kiev have been considering the project of creating a digital hryvnia for quite some time. A recent survey has indicated that the financial sector of the country would prefer e-hryvnia to facilitate transactions in the crypto space.
NBU will be able to establish a regulatory sandbox to test new services, technologies and tools in the payments sector that will be based on innovative technologies, the presidential office explained. The platform will allow the financial regulator to interact closely with startups from the industry and better understand their needs.
Ukraine to introduce stricter user authentication rules for payment service providers
The Law “On Payment Services” aligns Ukraine’s law with the European Union’s imperial framework in the region, facilitating the future integration of the country’s payment system with the European Union. Ukrainian lawmakers have adopted the norms of important European regulatory acts such as the Second Payment Directive (PSD2) and the Electronic Money Directive (EMD).
The law has been framed to ensure transparency in the provision of payment services and to strengthen consumer protection. Payment companies must meet strict requirements regarding risk management. In some cases, platforms will be required to implement the advanced user authentication processes required to prevent cyber fraud.
The law defines nine different categories of payment service providers, introducing new ones such as electronic money institutions and branches of foreign payment institutions. Non-bank payment service providers, such as payment institutions, e-money institutions and postal operators, will be able to open payment accounts, issue payment cards and receive electronic money. Non-bank financial institutions will not be required to participate in payment systems to make transfers.
The Presidential Administration also pointed out that the Law “On Payment Services” creates the conditions for the introduction of the ‘open banking’ concept in Ukraine. Its main objective is to integrate various service providers and technology companies into a single payment ecosystem. The authorities in Kiev hope to implement an open banking system by 2023.
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