Summary
Ukraine can become the first major nation to operationalize end‑to‑end, on‑chain budget execution. This proposal lays out a phased, legally grounded and technically rigorous plan to execute all direct budget disbursements in UAH‑denominated stablecoins (or e‑hryvnia/CBDC when available), to named public wallets of government entities and budget‑funded recipients. Every payment path - from Treasury to final recipient - would be publicly auditable in real time via block explorers and official dashboards, while preserving personal data where required.
Introduction
Ukraine stands today not only as a country at war but as a laboratory for the future of governance. Since 2014, Ukrainians have demanded a state that is radically more transparent, more accountable, and more efficient than the corrupt and oligarchic structures of the past. The Ministry of Finance has carried a particular burden in this transformation, for fiscal policy is not only about numbers in the budget law, but about the trust that binds the citizen to the state. At a time when the very survival of the nation depends on the discipline of public finances and the generosity of international partners, Ukraine must consider how to push the frontier of transparency further than any state has gone before.
I submit that the logical and necessary next step is to migrate Ukraine’s budget execution to a public blockchain. This would mean that every legal entity that receives funds from the state budget - ministries, agencies, municipalities, schools, hospitals, suppliers, or state-owned enterprises - would hold a public wallet linked to its legal identity. The Ministry of Finance, acting through the Treasury, would disburse hryvnia-denominated stablecoins (and later the e-hryvnia central bank digital currency) into these wallets. From the moment funds leave the central Treasury account until they arrive at their destination, every citizen and every donor would be able to verify the flow in real time through a public ledger.
Historical Motivation and National Imperative
Since independence, Ukraine has struggled with the corrosive effects of corruption. Despite numerous reforms, surveys repeatedly show that trust in government remains fragile. Citizens know too well that money earmarked for hospitals may be diverted to fictitious suppliers, that municipal transfers may be siphoned off before reaching their intended targets, or that state enterprises may use public funds for private gain. While the Ministry of Finance has tightened controls and international institutions have increased oversight, the fundamental weakness persists: the ordinary citizen cannot see the path of their money.
War has magnified this problem. Every hryvnia now carries double weight, for it represents not only the taxes of citizens but also the sacrifices of soldiers and the generosity of allies. In such circumstances, traditional systems of ex post auditing and opaque bank transfers are insufficient. The public demands certainty, and donors demand proof. Without a radical leap in fiscal transparency, Ukraine risks seeing trust eroded at home and support weakened abroad.
A blockchain-based budget offers precisely that leap. It would mean that the Ministry of Finance does not simply assure citizens and donors that funds are properly spent; it would allow them to confirm it themselves. In wartime, when propaganda and disinformation seek to undermine confidence, this is not a technical luxury but a strategic necessity.
International Comparisons
Ukraine is not alone in considering such an idea. In August 2025, a senator in the Philippines announced his intention to place the entire national budget on blockchain, arguing that every peso must be transparent and accountable. The Department of Budget and Management in Manila has already launched pilots on the Polygon blockchain to validate official documents. In the United States, the Department of Commerce is preparing to publish GDP statistics on blockchain, marking the first step toward blockchain-anchored national data. Within the European Union, the MiCA regulation has established a legal framework for stablecoins and tokenized money that allows for precisely the kind of hryvnia-pegged stablecoin Ukraine would require.
Yet in all of these cases, the scope remains limited. They speak of publishing documents, of anchoring statistics, or of exploring pilots. Ukraine has the opportunity to leapfrog these incremental efforts by moving directly to full budget execution on chain. It is precisely because Ukraine faces existential threats and depends so heavily on international credibility that such boldness is possible. Far from being reckless, it is the most prudent way to guarantee continued support and internal cohesion.
Practical and Operational Advantages
Moving budget execution to blockchain is not only a matter of image. It brings tangible operational benefits that would directly strengthen the Ministry of Finance. Blockchain transactions settle instantly, removing the lag that today plagues inter-budget transfers and supplier payments. Smart contracts can enforce legal restrictions automatically, ensuring that appropriations cannot be exceeded or reallocated without parliamentary authorization. Procurement contracts managed through ProZorro can be linked to on-chain milestones, so that funds are released only when delivery is confirmed, reducing fraud and increasing efficiency.
Audits become far easier. Instead of reconstructing financial flows months or years after the fact, auditors can access a complete and immutable ledger at any moment. Civil society organizations, watchdogs, and international partners can conduct independent analysis, relieving the Ministry of some of the burden of oversight while increasing confidence in the system. Donors, who often impose strict reporting requirements, would be satisfied immediately by direct access to data, speeding up disbursements and reducing administrative overhead.
Legal and Institutional Feasibility
The Ministry may reasonably ask whether Ukrainian law permits such a transformation. The answer is that with targeted amendments it can. Treasury regulations must be updated to recognize stablecoins and eventually the e-hryvnia as valid settlement instruments. The Budget Code should be amended to define blockchain entries as official accounting records. Procurement law should mandate that legal-entity suppliers disclose public wallets and permit smart contract-based escrow. Data protection law should distinguish between legal entities, whose transparency can be absolute, and natural persons, whose privacy must be protected with cryptographic techniques.
Ukraine has already advanced far on this path. The National Bank has piloted the e-hryvnia and is well aware of the global move toward digital currencies. The Ministry of Digital Transformation has integrated blockchain solutions into public administration and will be a natural partner. Civil society organizations such as Transparency International Ukraine and Dozorro are eager to adopt open data tools for oversight. In short, the institutional ecosystem is prepared, and the Ministry of Finance need only provide the strategic leadership.
Implementation Strategy
The reform should unfold in phases. In the first year, pilots can be launched in limited domains such as municipal subventions, donor-funded projects, and selected procurement contracts. These areas are ideal because they involve legal-entity recipients and are already subject to strong public oversight. Within eighteen months, most transfers between central government entities could be executed on chain. By the third year, nearly the entire budget could be migrated, with sensitive areas such as individual payrolls handled through privacy-preserving technologies like zero-knowledge proofs. By then, more than eighty percent of all direct disbursements would be visible in real time.
Costs and Financing
The costs of this reform are modest relative to its benefits. Development and integration may require ten to fifteen million U.S. dollars over the first eighteen months, an amount easily within reach given Ukraine’s access to EU and international digital governance funding. Annual operational costs will be two to three million dollars, offset by reduced reconciliation expenses, fewer audit demands, and lower fraud losses. Donors are likely to finance much of the upfront cost, for they will be the primary beneficiaries of the system’s transparency.
Risk Management
Of course, risks exist. Cybersecurity is paramount, but modern cryptographic tools, hardware security modules, and multi-signature wallets can provide protection equal to or greater than current Treasury systems. Blockchain networks can experience congestion or outages, but a multi-chain design with fallback to traditional payment rails ensures continuity. Privacy risks are real, but they can be mitigated by restricting full transparency to legal entities and protecting natural persons with pseudonymization. Legal uncertainty is resolved by amending the Budget Code, Treasury regulations, and procurement law. The greater risk lies in hesitation. To delay is to invite cynicism from citizens and doubt from donors.
Political and Strategic Significance
More than any technical advantage, the true power of this reform is political. Imagine the message it sends to a soldier at the front: that the taxes he pays and the sacrifices he makes are visible, respected, and protected. Imagine the reassurance it gives to a pensioner in Germany or a taxpayer in the United States who wonders whether their aid is truly helping Ukraine. Imagine the competitive advantage Ukraine gains when issuing sovereign bonds, demonstrating not only commitment to fiscal discipline but the ability to prove it in real time. No government in the world has dared such radical openness. Ukraine can be the first.
Recommendations for Immediate Action
I recommend that the Ministry of Finance immediately establish a steering committee with the National Bank, the Ministry of Digital Transformation, the State Audit Service, civil society representatives, and donor observers. Within ninety days, the committee should present draft amendments to the Budget Code and Treasury regulations, prepare a sandbox for simulated on-chain budget flows, and select pilots in municipal transfers and ProZorro contracts. Public communication should emphasize the moral principle that every hryvnia is trackable, every payment visible, and every citizen empowered to verify the state’s integrity.
Conclusion
Ukraine’s path to Europe and to victory requires not only military strength but institutional renewal. By placing its budget on a public blockchain, Ukraine would show that it is prepared to reinvent governance itself, building a state that is not merely less corrupt than in the past, but radically more transparent than any in the world. The Ministry of Finance has the authority, the expertise, and the responsibility to lead this reform.
The history of Ukraine is being written in these years. By embracing blockchain-based budget execution, the Ministry will not only secure the financial governance of the nation but will define a new standard of accountability for democracies everywhere. The time is now, and Ukraine is ready.
Strategic Objectives
1. Radical transparency & anti‑corruption: Make each hryvnia traceable from allocation to outcome, strengthening trust and reducing leakage.
2. EU‑grade compliance: Align with IPSAS, EU MiCA‑style stablecoin rules, FATF AML/CFT standards, and Ukraine’s evolving data protection law.
3. Operational resilience: Maintain continuity of fiscal operations under wartime cyber risk through distributed infrastructure and programmable controls.
4. Efficiency & speed: Reduce settlement times, reconciliation effort, and audit costs; enable instant, conditional payments.
5. Investor confidence: Signal governance quality to IFIs and private investors; catalyze digital‑finance innovation.
Scope
• In‑scope (Phase 1–3): Central government budget (General Fund & Special Fund) primary disbursements; grants/subventions to local governments; procurement payments via ProZorro; transfers to SOEs and budget‑funded institutions; selected social support programs delivered via intermediaries with privacy controls.
• Out‑of‑scope (initially): Classified defense procurements; individual payroll where doxxing risk exceeds transparency gains; cash‑equivalent benefits with sensitive PII; legacy judicial payouts. These become candidates for zero‑knowledge (ZK) transparency in later phases.
Policy & Legal Foundations (summary of required actions)
1. Treasury Law/By‑laws updates: Recognize tokenized e‑money (UAH‑pegged stablecoin) and, when launched, e‑hryvnia (CBDC) as permissible settlement media for public payments; define blockchain ledger entries as official accounting records.
2. Accounting standards: Map on‑chain transactions to the Chart of Accounts and IPSAS cash/accrual recognition; publish a binding token‑to‑ledger posting guide.
3. Procurement rules (ProZorro): Require on‑chain milestones and escrow/smart‑contract based releases for contracts above thresholds; record contract IDs (OCDS GUIDs) on‑chain as payment metadata.
4. Data protection: Implement a privacy policy that distinguishes entity‑level transparency (public names and wallets for legal entities) from natural‑person protection (pseudonymous or ZK‑summarized disclosures). Align with the new Personal Data Protection framework.
5. AML/CFT: Mandate Travel Rule‑compatible metadata for transfers crossing VASP boundaries; whitelist licensed custodians; enforce sanction screening and address risk scoring.
6. Tax & audit: Clarify VAT/corporate income tax treatment of stablecoin receipts; empower State Audit Service and Accounting Chamber with read‑only keys, analytics tooling, and Merkle‑proof sampling procedures.
Design Principles
• Public by default, private by necessity: All entity recipients and their payment flows are public; personal data is minimized using pseudonymization and ZK proofs for sensitive benefits.
• Use existing rails first: Leverage UAH‑denominated tokenized e‑money issued by licensed financial institutions; transition to e‑hryvnia once NBU authorizes broad use.
• Chain neutrality with interoperability: Use a dual‑layer architecture - a widely used public L1/L2 for transparency & verifiability and a permissioned execution layer for programmability where required; anchor state via regular L1 checkpoints.
• Open data, open source: Publish schemas, smart contracts, and dashboards under permissive licenses; adopt OCDS, ISO 20022 mappings, and open APIs.
• Defense‑grade security: Hardware‑secured multisig, threshold wallets, continuous monitoring, incident response runbooks.
Target Architecture
1. Treasury On‑Chain Account (TOA): A multisig smart‑contract wallet operated by the Treasury with spending limits, role‑based keys, and time‑locks.
2. Recipient Registry: Canonical list of legal‑entity recipients (EDRPOU, legal name, purpose codes) with public wallet addresses and status; integrates with ProZorro, E‑Data/Spending.gov.ua, and the Budget Management IS.
3. Stablecoin Layer: UAH stablecoin (EMT‑like) issued by licensed e‑money institutions or state agent; full‑reserve audits; programmable compliance. CBDC e‑hryvnia slot‑in once generally available.
4. Settlement Network: Preferred public L2 (e.g., EVM‑compatible) for throughput/fees; periodic checkpoints to L1; support for account abstraction for UX and key recovery.
5. Compliance & Oracles: KYC/KYB attestations, sanction lists, budget allotment oracles, FX oracles (for donor‑denominated inflows), and Travel Rule gateways.
6. Analytics & Observability: Government‑run and third‑party explorers; public dashboards; anomaly detection; Merkle‑proof downloadable ledgers for civil society.
Token Model & Walleting
• Instrument: UAH‑denominated e‑money token or e‑hryvnia; 1:1 reserves in segregated accounts/CBDC core; no algorithmic/under‑collateralized models.
• Issuers/Custodians: Licensed banks/e‑money institutions under NBU supervision; independent reserve attestations.
• Wallet Types:
• Government wallets: Multisig with policy engines (per‑program limits, whitelists, time‑locks).
• Entity recipient wallets: Named public wallets mapped to EDRPOU; optional custodial wallets for smaller municipalities/NGOs
• Individual beneficiary wallets (later phases): Pseudonymous on‑chain with off‑chain identity binding; opt‑in privacy protections.
Smart‑Contract Controls (illustrative)
• Appropriation guard: Ensures outflows match enacted budget lines (KPKVK codes) and not exceed allotments.
• Milestone escrow: Links ProZorro contract milestones to payment release; automatic penalties for late delivery.
• Spend caps & rate limits: Daily/monthly caps per program and recipient; circuit breakers.
• Clawback & freeze: On policy breach or sanction hit; governed by transparent on‑chain proposals.
• Event logging: Emission of standardized events with metadata (program, contract ID, region, purpose code, COFOG, SDG tag).
Privacy & Safety
• Entity transparency: Legal‑entity names are public by design.
• Natural persons: Use pseudonymous addresses and publish cohort‑level aggregates; adopt ZK‑proofs to prove that benefits were paid to eligible users without disclosing identities.
• Minimization: Store only what is necessary on‑chain; keep PII off‑chain in accredited registries with hash anchors on‑chain.
Governance & Oversight
• Steering Committee: MoF Treasury (chair), NBU, MinDigital, State Audit, ProZorro, NACP, NABU observer, civil society (Dozorro, TI Ukraine), donor reps.
• Open Governance Artifacts: Roadmap, contract repos, change logs, and security advisories published publicly.
• Independent Assurance: Annual third‑party security audits, SOC 2‑type controls for service providers, reserve attestations for the stablecoin.
Implementation Roadmap (18–30 months)
Phase 0 (0–3 months): Legal gap analysis; choose reference chain(s) & wallet standards; draft posting guide; select issuers/custodians; establish cybersecurity baseline.
Phase 1 (4–9 months): Pilots
• Pilot A (Line‑item grants to municipalities): 10–20 municipalities, education/health subventions; fully public wallets; dashboard #1.
• Pilot B (ProZorro contracts): 100 contracts with escrowed milestone payments; integrate OCDS IDs.
• Pilot C (Donor‑funded programs): Route selected IFI/UN disbursements on‑chain to test FX/oracle flows.
• Success metrics: Settlement time < T+0.1d; reconciliation automation >90%; audit trail completeness = 100%; user satisfaction >80%.
Phase 2 (10–18 months): Scale‑up
• Expand to all central budget entity‑to‑entity payments; optional CBDC e‑hryvnia trial in parallel where available; roll out Travel Rule gateways.
Phase 3 (18–30 months): Full coverage
• Cover all eligible budget programs; extend to high‑risk areas with ZK privacy; open public API; publish machine‑readable complete on‑chain budget.
Cost–Benefit & Funding
• Capex: Engineering (contracts, integrations), compliance tooling, security hardening, audits, training, UX. Initial estimate: 8–15m USD equivalent over 18 months depending on insourcing.
• Opex: Node ops, key management HSMs, analytics subscriptions, continuous audits (~2–3m USD/yr).
• Savings/Benefits: Faster settlement/reconciliation (20–60% process cost reduction), reduced fraud/leakage, lower audit expense, improved donor conditionality compliance, reputational premium.
• Funding sources: State budget (digitalization line), EU/IFI digital‑governance grants, donor technical assistance, public‑private partnerships for explorers/analytics.
Risk Register & Mitigations
• Legal uncertainty: Fast‑track ministerial orders and Rada amendments; align with IPSAS and payment laws; publish legal opinions.
• Cybersecurity threats: HSM‑backed multisig, segregation of duties, key ceremonies, bug bounties, continuous monitoring, incident drills.
• Chain outage/fees: Multi‑chain failover; L2/L1 routing with pre‑approved alternatives; payment queues with fallback to CBDC RTGS when live.
• Privacy harms: Strict scoping (entities public, persons protected), ZK proofs, off‑chain PII with on‑chain hashes only.
• FX/convertibility: Prefer UAH tokens/CBDC; where foreign stablecoins are used for donor inflows, convert on arrival via licensed FX.
• Vendor lock‑in: Open standards, multi‑vendor architecture, public repos, competitive tenders.
Data & Public Dashboards (MVP features)
• Real‑time feed: Every payment, program code, amount, timestamp, sender, recipient; CSV/JSON export.
• Trace view: From appropriation → allotment → ProZorro contract → disbursement(s) → recipient wallet.
• Maps & cohorts: Regional distribution, sectoral spend, supplier networks.
• Watchlists: High‑risk flags (rapid chain‑hops, sanctioned counterparties, unusual routing).
• Citizen alerts: Subscribe to programs/regions; receive notifications of large payments or changes.
Technical Standards & Interoperability
• Messaging: ISO 20022 mapping of budget and payment events.
• Open Contracting: OCDS IDs embedded in payment metadata.
• Identity: eIDAS‑compatible KYB/KYC for entities; integration with Ukraine’s eID/Diia.
• Audit artifacts: Periodic Merkle roots published by MoF; downloadable state snapshots.
Public Communication & Change Management
• Narrative: “Every hryvnia is trackable.” Emphasize protections for personal data.
• Capacity building: Training for accountants, treasurers, municipal finance officers, auditors.
• Civil society engagement: Publish APIs, host hackathons, fund independent explorers and watchdog tooling.
Vendor & Chain Selection Criteria (weighted)
• Security & uptime (25%)
• Regulatory alignment in EU/UA (20%)
• Throughput/fees & L2 maturity (15%)
• Tooling & developer ecosystem (15%)
• Interoperability/standards support (10%)
• Governance openness & public interest alignment (10%)
• Local capacity/skills availability (5%)
Illustrative Pilot Scenarios
• Education Subvention Pilot: TOA → Municipality Education Wallet → School Cluster Wallets; public dashboards; quarterly ZK proof that staff payroll was paid to eligible teachers without doxxing individuals.
• Procurement Pilot: MoH buys equipment via ProZorro; contract milestones embedded on‑chain; escrow releases upon delivery or oracles; full trace with supplier wallet names.
• Donor Co‑financing Pilot: IFI funds arrive in FX stablecoin; on‑chain FX swap to UAH token; disbursement to project implementers; public analytics reconcile donor conditions.
Legislative Package (drafting checklist)
• Amend Budget Code & Treasury regulations to accept tokenized UAH/e‑hryvnia; recognize blockchain entries as primary records.
• Update Public Procurement Law to enable on‑chain milestones and escrow; mandate public wallet disclosure for legal‑entity suppliers.
• Enact data‑protection implementing acts to govern pseudonymization/ZK disclosure for natural persons.
• Issue AML/CFT guidance for on‑chain public payments, Travel Rule compliance, sanctioned‑party screening.
• Approve accounting instructions mapping tokens to accounts, recognition, and reporting.
KPIs & Success Metrics
• % of direct budget disbursements executed on‑chain (target: 80%+ by end of Phase 3).
• Average settlement & reconciliation time vs. baseline (target: −70%).
• Audit exception rate (target: <1 per 10,000 tx).
• Share of ProZorro contracts with on‑chain escrow (target: 60%+ by Phase 3).
• Citizen engagement metrics: API calls, dashboard sessions, watchdog reports resolved.
Why Ukraine Now
• Ukraine already leads in digital government, open procurement (ProZorro), and has operational experience with on‑chain humanitarian disbursements. Moving budget execution on‑chain consolidates these strengths, aligns with EU integration, and sends a clear signal to citizens, donors, and markets: public money leaves a public trail.
Next Steps (90‑Day Plan)
1. Establish Steering Committee & PMO; approve reference architecture and risk appetite.
2. Launch vendor‑neutral RFP for UAH stablecoin/e‑hryvnia wallet stack and analytics.
3. Draft and circulate the posting guide and legislative amendments for consultation.
4. Stand up sandbox with mock budget lines and synthetic payments; integrate with ProZorro testbed.
5. Select pilots (municipal grants, ProZorro contracts, donor program) and begin onboarding of 50–100 legal‑entity recipients with public wallets.