Ukraine’s Deputy Minister of Digital Transformation: We Want Ukraine to Join Countries That Develop New Economy

15.01.2020

Ukrainian legislators are working on regulations for the crypto-industry. The Verkhovna Rada of Ukraine (the country’s parliament) will hear the tax law amendments that will include the definition of cryptocurrencies. The Ministry of Digital Transformation, which is tasked with the creation of the “state in a smartphone,” is now collaborating with Binance to reach its goals.

It is an important endeavor for Ukraine and an ordeal for the country’s legislators.

ForkLog YouTube host ForkLog talked with Alexander Bornyakov, the deputy Minister of Digital Transformation, about the Ministry’s agenda and the digital transformation of Ukraine.

This is the transcript of the conversation.

ForkLog: Tell us about your background.

Alexander Bornyakov: I’ve been launching outsourcing companies, later took on high-tech and startup investing. At the dawn of the crypto-industry I was mining and selling cryptocurrency, then began investing in ICOs. For the last two years, I’ve been living and studying in the U.S.

ForkLog: How did you get into the Ministry of Digital Transformation?

AB: I’ve met the Minister of Digital Transformation Mykhailo Fedorov. He was looking for someone to help the Ministry interact with the businesses. I became that person.

My goal isn’t just about regulating cryptocurrencies. I’m going to develop a startup ecosystem, form an environment for outsourcing companies, and make it easier for IT-businesses to operate.

ForkLog: The Ministry is primarily associated with the “state in a smartphone.” What is the Ministry going to do with that?

AB: We are planning to move all the services for the citizens online. About 20% of these services have to be automated in order to exclude the human factor. This is our main task.

Aside from that, we need to communicate with IT-companies, build better internet coverage across the country, and educate people.

People should be able to use the internet and infrastructure. We are planning to teach about 2 million people each year to use gadgets. Estonia had a similar program.

ForkLog: Apart from Estonia, what are the other cases you study?

AB: Georgia, Azerbaijan, Belarus.

ForkLog: The previous administration moved two registers onto blockchain. What do you think of their job?

AB: I don’t know any successful cases, except when they moved trading to blockchain.

ForkLog: Does the state need this technology?

AB: It does. Although, we need to refactor the internal processes first. The country has 300 registries. Each one is in turmoil. Why digitize that?

We are planning to blockchainize a lot of registries, such as the queue for apartments and property data. Still, we have to get rid of redundancy first.

The state should decide what information should be collected and how to protect it. Only then we will be able to move onto blockchain. There should be 10 registries, not 300.

ForkLog: The Ministry of Digital Transformation has signed a memorandum with Binance. What’s in it for the country?

AB: Binance uses fiat gateways. It is interesting in terms of the country’s economy. Moreover, Binance brings its tokenization platform, startups, and education to the table.

The most important thing about Binance is the name. After signing the memorandum we’ve received queries from Bittrex and Coinbase. Now it is much easier to talk about legalizing cryptocurrencies.

ForkLog: What will Binance have to do according to the memorandum?

AB: Binance’s objective is to register a company. They won’t have to pay anything.

Further on, Binance representatives will advise the Ministry on the matters of exchange operations and tools. This will allow us to develop better legislation for cryptocurrencies.

ForkLog: What does it include now?

AB: The legislation defines cryptocurrencies, virtual assets, utility and security tokens. Mining will be described in other documents.

It also removes the VAT on the income from cryptocurrencies for five years. Instead, market participants will pay 5% of the income from investments.

We’re making this law for the entire cryptocurrency market, not Binance. We want Ukraine to join the countries that develop the new economy.

ForkLog: Aren’t you afraid that Ukraine will be seen as a country that encourages money laundering?

AB: We understand that grey money may go through exchanges. That’s why we amended the AML legislation accordingly.

ForkLog: What will the government do next in terms of cryptocurrency regulation?

AB: The next step is tokenization. Yet, now we need to start the regulation mechanisms.

I want anyone in the crypto-industry to be able to say “I’m doing everything right.” Maybe at first, I’ll have to personally stop the overly enthusiastic representatives of law enforcement, but eventually, the legislation will make life easier for the crypto-community.

ForkLog: What do you expect to see when the law comes into effect?

AB: I expect foreign and local companies to be able to work within the legal field and apply their expertise in Ukraine. I also expect to see foreign businesses coming to the country.

As for mining, here the barrier is the price of electricity, not the lack of regulation. I do not expect to see something significant in this field.

ForkLog: What do you think about the future of cryptocurrencies: will altcoins stay on the market or will it be just Bitcoin?

AB: Bitcoin is the digital gold. Because of its scalability problems, it is inapplicable to a large economy. The future is with the projects that solve this problem. Still, Bitcoin is going to stay, just like gold. The metal isn’t used for daily transactions, but it’s being stored in all countries.

ForkLog: You mean, Bitcoin will be held by state-owned funds?

AB: Yes. I hope cyberpunk will come soon.

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Tags: Binance, blockchain, regulation, Ukraine