Ukraine, already receptive to crypto, has one more reason to be bullish on blockchain â thanks to Stellar.
A Thursday report unpacking a two-year study on the feasibility of tapping the Stellar crypto ecosystem to move money around the war-torn country detailed a number of reasons for optimism when it comes to digital assets.
One of Ukraineâs oldest and largest banks, TASCOMBANK, led the pilot behind the study. It came about at the 2021 bequest of several of the eastern European nationâs top financial regulators and legislators.
The TASCOMBANK study, commissioned in part by Ukraineâs influential Ministry of Digital Transformation, found a number of use cases (versus its TradFi banking system) for moving around âelectronic moneyâ via Stellar â the blockchain launched by Ripple co-founder Jed McCaleb in 2014 following his exit from Ripple Labs.
The study found Stellar improved security and confidentiality of customer data, boasted far quicker and far cheaper transactions with âhigh throughput.â
And itâs especially relevant now, given Ukraineâs national bank has blocked local commercial banks from rolling out new forms of âelectronic moneyâ â crypto, basically â since âthe first daysâ of Russiaâs âfull-scale invasion of Ukraine.âÂ
Ukraine sees real crypto use-cases via Stellar blockchain
Ukraineâs national legislature rolled out a number of significant changes to its regulations around digital assets in 2021, around the same time the study started.Â
The study â parsing payments between individuals and businesses, as well as their payrolls â appears to validate a number of the cryptocurrency initiatives that were introduced at the time. Â
Deputy Minister of Digital Transformation Oleksandr Bornyakov said the Stellar study highlighted a number of Ukraine-specific âkey advantagesâ of the real world use cases for blockchain tech. Ukraine regulators are considering the possibility, according to Bornyakov, of introducing additional permissions for digital assets as a result
âThe results of the [pilot] proved the key advantages of blockchain,â Bornyakov said in a statement. âIn particular, fast processing and cost-effectiveness of transactions, accountability and transparency of the system, and also simplified access to financial services.âÂ
But debate over whether Stellar is sufficiently decentralized has persisted since the network went down for two hours in 2019. Then, in 2021, a string of crypto exchanges halted withdrawals after transactions began failing during a node outage.
Stellarbeat currently shows the blockchain is maintained by only 36 fully validating nodes with 13 lesser validator nodes in support â Stellarâs main rival (and McCalebâs previous project) Ripple is supported by around 150 while Ethereum boasts hundreds of thousands anchored by almost 11,500 physical nodes.
A lower validator count puts pressure on a small group of machines to keep the network running smoothly, while higher counts allow more of the network to go offline before service is interrupted.
Still, Stellarâs showing in the study is good news for the developing crypto dealings of TASCOMBANK. With the blessing of regulators, the bank has opened up a number of new units focused on emerging TradFi applications for distributed ledger technology (DLT).Â
â[The research] confirmed the readiness of the bankâs infrastructure to integrate with blockchain solutions and provide an appropriate level of financial services using virtual assets, taking into account all regulatory requirements,â the study said.Â
An executive for the Ukrainian financial entity went as far as to dub the resulting use cases as âdrivers of the transformation of the financial landscape in Ukraine.â
Itâs set to provide a new, core means for disseminating state-supplied financial assistance to Ukraine citizens.Â
The resulting digital payments outlook isnât all rosy, though. There are scores of outstanding questions to tackle for both regulators and financial facilitators, both said.Â
One prominent one pertains to CBDCs: Who would be responsible for overseeing onboarding for its users, including know your customer (KYC) measures?
Oleksii Shaban, deputy chairman of the National Bank of Ukraine, said in TASCOMBANKâs research that the âquestion remains unanswered today and is closely related to another:Â âWhether the demand for CBDCs in a wallet opened in a commercial bank (the so-called two-level model) will be sufficient compared to that envisaged in the concept of âdigital cashâ â digital money as a direct claim to a central bank (the one-level model).â
The outcome demonstrates the proven potential of âreal worldâ use cases built on the consensus-driven blockchain and âsets the foundation for greater adoption of virtual assets in Ukraine,â according to Denelle Dixon, chief executive of the Stellar Development Foundation.Â
Largely positive in its assessment of the current role and future potential of cryptocurrencies countrywise, the results ought to bolster a growing number of developing digital asset initiatives pioneered by Ukrainians.Â
Plus up-and-coming related pushes pioneered by outside players, such as the UNâs significant move to utilize the stablecoin USDC to act as the rails for disseminating humanitarian aid packages to those in need of money fast: Ukrainian refugees.Â
Crypto exchange Binance earlier this month struck a deal with a prominent pharmacy in the country to enable crypto-driven payments for medical products, including medicine. The rationale is to bolster Ukraineâs battered infrastructure via digital assets.
