Despite the war and its dire challenges, the Ukrainian fintech industry is working to improve the nation’s infrastructure and regulations to attract credible companies and institutional investors from diverse backgrounds.
Undoubtedly, many investors believe that it is dangerous to invest in Ukraine right now. But for regional fintech companies, business continues as usual. In particular, 90% of Ukrainian IT companies work since they have proven their resilience in adverse situations.
State-supported regulations for the fintech industry
Ukrainian President Volodymyr Zelenskyy approved a law in March creating the country’s cryptocurrency regulatory framework. The law prohibits the use of digital assets as a form of payment, but intends to provide the ideal conditions for a thriving cryptocurrency market. Cryptocurrency exchanges can now apply for a license to operate legally in the country. Crypto businesses can open bank accounts and choose from different licenses according to their specific needs.
The IT sector, which generated export earnings of $3.2 billion in the first five months of 2022, a 27% increase over the same period in 2021, accounted for almost half of Ukraine’s overall service export volume. One of the main goals of the Ukrainian government is to increase the IT sector’s GDP contribution from the current rate of 4% to 10% by 2024. Together, the government’s support and the industry’s strong growth give a loud and obvious signal that the IT sector is ready for investment .
International companies’ support to Ukraine contributes to the sector’s continued growth. Earlier this month, the Ukrainian Ministry of Digital Transformation introduced Digital4Freedom, a global initiative that will be the main avenue 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 consists of nine ideas presented to 40 businesses, most of which have agreed to offer funding or technological solutions.
The Russian-Ukrainian war is rewriting the laws of cyber warfare
For example, Amazon plans to invest more than $100 million in cloud storage services for Ukrainian state documents and is reportedly working to develop solutions to incorporate artificial intelligence into courts. To offer financial, IT and web 3 training programs, cryptocurrency exchange Binance will formally partner with Ukraine’s Ministry of Digital Transformation.
With the Ministry of Digital Transformation’s cooperation, Meta has launched a $1.5 million aid effort to help the Ukrainian economy recover by providing SMEs with a specialized training center.
AI-powered Fintech Startup Zeni raises $34 million in Series B round
Tech entrepreneurs are working hard to expand the industry in Ukraine
The conflict damages 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 non-stop to expand the industry. They are in a good position to act as lynchpins for a new wave of technology companies 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. In addition, the Ukrainian Association of Fine Technology and Innovation Companies (UAFIC), the first non-EU member, joined the European Digital Finance Association (EDFA). Both organizations work together to improve the climate for fintech in Ukraine.
We believe that Ukraine’s determination in the face of Russian aggression and the tremendous growth of the fintech sector despite the crisis have shown why investors should not be afraid to engage in the rapidly developing sector. Despite the difficult conditions in the country, the industry is still expanding.
