UKRAINE'S REGULATORY INITIATIVES IN THE FIELD OF DECENTRALIZED FINANCE: PROSPECTS AND CHALLENGES

Abstract

This study investigates Ukraine’s regulatory initiatives in the rapidly evolving decentralized finance (DeFi) sector, emphasizing the topic’s acute relevance in the context of unprecedented technological advancements and the global shift toward digital financial solutions. With the aim of elucidating both the transformative potential and inherent challenges of DeFi, the research employs a rigorous comparative analytical approach that combines a systematic review of current legislative frameworks with qualitative content analysis and detailed case study comparisons from leading financial jurisdictions. By meticulously scrutinizing legal provisions, evaluating policy discourses, and identifying critical obstacles such as scalability limitations, regulatory ambiguities, cybersecurity vulnerabilities, and market instability, the study reveals that DeFi exerts a dual influence on economic dynamics: on one hand, its implementation promises enhanced transparency, security, improved transactional efficiency, and broader financial inclusivity, while on the other hand, it introduces significant risks that may undermine investor confidence and overall market stability if not managed effectively. The findings are further substantiated by comparative insights drawn from experiences in countries like Switzerland, Singapore, and Estonia, which underscore the benefits of adaptive regulatory reforms. The practical value of this investigation is highlighted through its clear, actionable recommendations for policymakers, including the need for legislative updates, the establishment of blockchain regulatory sandboxes, and the strengthening of public-private partnerships to foster a resilient and forward-looking digital financial market. Ultimately, the paper provides a balanced framework that not only identifies the key areas requiring regulatory improvement but also charts a feasible pathway for integrating cutting-edge technological innovation with sound financial governance, thereby enhancing Ukraine’s competitive positioning on the global stage and ensuring sustainable economic development.