Despite the war and its awful challenges, the Ukrainian fintech industry is working to enhance the nation’s infrastructure and rules to attract credible companies and institutional investors from various backgrounds.
Undoubtedly, many investors think it’s dangerous to invest in Ukraine right now. But for regional fintech companies, business continues as usual. Notably, 90% of Ukrainian IT companies are working since they have proven their resilience in unfavorable situations.
State-backed regulations for the fintech industry
President of Ukraine Volodymyr Zelenskyy approved a law in March, creating the country’s cryptocurrency regulatory framework. The law prohibits using digital assets as a form of payment but intends to provide the ideal conditions for a thriving cryptocurrency market. Cryptocurrency exchanges can now seek a license to run legally within the country. Crypto businesses can open bank accounts and select from various licenses according to their specific needs.
The IT sector, which generated export revenue of $3.2 billion in the first five months of 2022, a 27% increase over the same period in 2021, accounted for nearly half of Ukraine’s entire services export volume. One of the main goals of the Ukrainian government is to increase the IT sector’s GDP contribution from its current rate of 4% to 10% by 2024. Together, the government’s backing and the industry’s strong growth provide a loud and obvious signal that the IT sector is prepared for investment.
International businesses’ support for Ukraine contributes to the sector’s continued growth. Early this month, the Ukrainian Ministry of Digital Transformation introduced Digital4Freedom, a global initiative that will be the main route for philanthropic donations from the digital sector to Ukraine.
With the help of Digital4Freedom, anyone can contribute money to the nation’s economic rehabilitation as part of the global UNITED24 project. The program comprises nine ideas presented to 40 businesses, most of which have agreed to provide financing or technological solutions.
For instance, Amazon reportedly plans to invest more than $100 million in cloud storage services for Ukrainian state documents and is purportedly working to develop solutions for incorporating artificial intelligence in courts. To offer training programs in finance, IT, and web 3, the cryptocurrency exchange Binance will formally collaborate with Ukraine’s Ministry of Digital Transformation.
With the Ministry of Digital Transformation’s collaboration, Meta has launched a $1.5 million aid effort to help the Ukrainian economy recover by providing small and medium-sized businesses with a specialized training center.
Tech entrepreneurs are working hard to expand the industry in Ukraine
The conflict is harming the production of goods and services in Ukraine. The business leaders also expect inflation and a decline in the value of the hryvnia the following year. Ukrainian tech entrepreneurs are working nonstop to expand the industry. They are in a good position to act as the lynchpins of a new wave of technology businesses that will greatly strengthen the economy.
The legal framework for the Ukrainian fintech sector, including payment services, will be improved by the Law of Ukraine on Payment Services (LPS) introduced this year by Ukrainian MPs. Additionally, the Ukrainian Association of Fintech and Innovation Companies (UAFIC), the first non-EU member, joined the European Digital Finance Association (EDFA). Both organizations are cooperating to enhance the climate for fintech in Ukraine.
We believe that the determination of Ukraine in the face of Russian aggression and the tremendous growth of the fintech sector despite the crisis have shown why investors shouldn’t be scared to engage in the quickly developing sector. Despite the difficult conditions in the country, the industry is still expanding.