The influence of virtual finance on the sustainable development of the country’s economy in the conditions of digitalization
Justification of the influence of virtual finance on the sustainable development of the country's economy. The essence of virtual finance, the fintech industry and DeFi projects. Investing in digital assets, regulation of the cryptocurrency market.
| Рубрика | Финансы, деньги и налоги |
| Вид | статья |
| Язык | английский |
| Дата добавления | 25.06.2024 |
| Размер файла | 169,1 K |
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The influence of virtual finance on the sustainable development of the country's economy in the conditions of digitalization
Sloboda L., Ivan Franco National University
Active applying of digitalization of all spheres of services, the introduction of blockchain technology cause a paradigm shift in the global financial system towards virtual finance, old bureaucratic systems of corporate governance are dying out. The age of digitalization is irreversibly changing the principles of interaction between economic entities and all segments of society in order to achieve the goals of sustainable economic development. In the geopolitical space, the map of global capital flows is changing. The issue of integrating virtual finance into the traditional financial system is of growing concern to regulators and central governments, which are gradually losing their monopoly on issuing money and controlling its transmission channels. Business efficiency, speed of energy movement, freedom in decisionmaking, the true value of products or services will increasingly be indicators of socio-economic justice. The irreversibility of these changes is relevant to the study of the current impact of the virtual finance industry on the sustainable development of the country's economy in the context of digitalization.
Thus, the growth of capitalization of the digital assets market indicates the transfer of significant amounts of capital from the real economy to its virtual sector. Investment capital, which was previously used to modernize and expand production, is now invested in the digital sphere, allowing quick and high returns for both individual and corporate and institutional investors. This is also typical for Ukraine.
The purpose of scientific research is to substantiate the impact of virtual finance on the sustainable development of the country's economy in the context of digitalization. In accordance with the purpose, the objectives of scientific work are
¦ to determine the challenges for the development of virtual finance in the context of digitalization and their impact on sustainable development goals;
¦ to identify the essence of virtual finance, fintech industry and DeFi projects and their role in the financial system;
¦ to analyze current trends in investing in digital assets and identify features of regulation of the cryptocurrency market;
¦ to outline the current prospects and risks of virtual fintech and DeFi companies.
The object of research is the sustainable development of the country's economy in the context of digitalization. The subject is virtual finance and companies engaged in professional activities in the field of digital assets.
Research methods that reveal the theme of the work are: analysis and synthesis of the theoretical basis, methods of generalization, structuring, induction and deduction, systems approach, graphical and comparative methods. Also in the process of implementation of tasks used general scientific and applied analytical methods, in particular, the authors conducted an empirical study on the example of investment in digital assets of Company X (registered in Dubai City and successfully operating in international markets in 45 countries since 2018) in the amount of X 000 USD, which allowed for the COVID-19 pandemic from April 2020 to February 2022 to receive 8% of the monthly investment, successfully withdraw investment in fiat money and continue to make a profit based on the usage of DeFi, including
coin stacking, as well as new knowledge and professional skills in working with DeFi platforms, to conduct consulting activities.
The scientific novelty of the obtained results lies in the further development of the essence of virtual finance, the fintech industry, and DeFi projects and their role in the financial system.
Practical significance: development of recommendations on perspective directions of integration of virtual assets into the traditional financial system in the conditions of accelerated movement to the digital transformation of society, based on the use of blockchain technology in financial transactions and KYC processes are relevant when opening customer accounts. which contribute to improving regulatory oversight and compliance.
The essence and challenges of virtual finance in a digital era and their impact on the economy's sustainable development
Uncertainty about COVID-19 is a manifestation of how the rapid development of globalization has led to the rapid transmission of disease between states and has shown how interdependent states and peoples on all continents are [1; 2]. It is obvious that removing Ukraine from globalization processes is an irrational and impossible solution, so it is necessary to reduce all the negative effects of globalization and use all its positive aspects. An important manifestation of globalization is the active processes of digitalization of society, which has a significant impact on the forms of achieving sustainable development goals.
Digitalization is a deep penetration of digital and innovative technologies into business processes, economy, communications. The transition of the economy to the era of digital opportunities has led to the need for digitalization of management processes, the introduction of digital products to meet market demand, as shown in table. 1.1.
Table 1.1.The essence of the transition to digital transformation *Digital representation Digitization Digital transformation
|
Digital representation of physical objects or their attributes (such as a scan of a document). Usually, it's about converting something from a non-digital format to a digital one. This trend dates back to the early 1960s. |
Improving the usage of digital technologies and data. That is, this is the next level after digitization. Examples are microprocessor control systems or software systems. Digitalization improves existing business processes, but does not transform them. |
This is a real transformation of the business, which is made possible by digitalization. Example - replacing local control with remote control - control of the same processes. A more advanced example is the transition to a service business model (selling not a product but a service). |
*created by authors
Thus, due to the spread of COVID-19, many industries have switched to remote service and online services. According to experts, more than 60% of the world's largest companies are already working on a strategy for digital transformation. Europe currently has 12% of its digital potential and the United States 18%. Germany has 10% of its digital potential, while the UK is almost equal to the US - 17%. Instead, Ukraine uses less than 1% of its digital potential. According to analysts, the period of digitalization does not exceed 5-7 years and is actively accelerating during the pandemic [3]. Digital transformation refers to a wide range of business areas related to process automation and improved customer service.
Digitalisation intensifies the achievement of the goals of sustainable economic development, as sustainable development is a general concept of the need to strike a balance between meeting the modern needs of mankind and protecting the interests of future generations in a safe and healthy environment. own needs [4].
Innovative approaches to shaping the behavior of socio-economic actors and economic effects of technology contribute to the goals of the concept of sustainable development, in particular, production and consumption of competitive products with low material and energy consumption, preservation and reproduction of the environment, social adaptation and rehabilitation increase life expectancy. The tools for solving the problems of sustainable development in the digitalization era are given in Annex A, and the economic effect of technologies projected by 2025, which make it possible to increase competitiveness in all sectors of the economy, is shown in Annex B.
In July 2020, the UN released a report outlining its vision for the future of the global economy after overcoming the effects of the COVID-19 pandemic. Analysts have identified six models of economic development for the next decade, including Exabyte Economy and Experience Economy.
It shoud be noted, that the potential of the exabyte economy is significant, because the market for cognitive computing by 2025. It will amount to 49.3 billion US dollars; the estimated economic impact of the IoT is estimated at 11.1 trillion. US dollars / year in 2025; in 10 years 5G will generate additional products worth 12.3 trillion. USD, and the connection of devices for remote monitoring by 2025 estimated at 1.1 trillion USD dollars / year [3].
These factors update the prospects for the development of virtual business. If we analyze the companies that are currently trending in the global market, it should be noted that these are the TOP-20 companies that in 2018 with the spread of the pandemic, invested the most in research and development (Fig. 1.1 ).
Fig. 1.1. Top 20 global companies with the highest R&D spending, billions USD [5]
In particular, companies such as Amazom, Facebook, Apple and Microsoft are the leading global companies that are at the forefront of the formation of MetaVerse, using the latest programming model [6]. These companies, basical their subsidiaries, have payment licenses in the area of "fintech" in certain jurisdictions. By digitizing each step of the transaction, the company gains economic benefits by reducing the processing of large numbers of them. This technology involves processing, storing and identifying information, reducing the cost of transactions and making them more efficient and faster. The development of e-government at the national level is assessed by the relevant index, which is based on three components: the index of online services, the index of telecommunications infrastructure and the index of human capital [7].
Importantly, that the same countries are quite liberal in virtual finance, and their central banks are actively working on regulatory documents for the integration of virtual currencies in the traditional financial sector.
Research shows, that the future of blockchain technology in banking, remittances and decentralized markets will be much more intriguing, as one of the areas with clear blockchain applications is financial services conducting transactions [8; 9].
Examples of virtual business in the field of finance are fintech companies, cryptocurrency investment companies, companies in the spheare of decentralized finance (DeFi-projects). FinTech is technology used in financial services or used to help companies manage the financial aspects of their business, including new programs and applications, processes and business models. In terms of procedures, the term "FinTech" refers to new applications, processes, products or business models in the field of financial services, consisting of one or more additional financial services provided entirely or mostly via the Internet [10].
Decentralized Financial Services (DeFi) is a common name for analogues of traditional financial instruments implemented in a decentralized architecture. These services are publicly available, are open source projects and are often based on smart contracts. Decentralized financial services include non-custodial cryptocurrency lending protocols, decentralized exchanges (DEX), forecasting markets, and synthetic asset and derivative issuance protocols [11]. DeFi systems work mainly with virtual assets and cryptocurrencies, as well as protocols for its integration into the firt money system - the traditional financial system.
Analysis of current trends iof investing in digital assets and features of its regulation
The rapid development of globalization processes has created for investors a wide range of investment options and new ways to make a profit. Under quarantine measures, digital platforms have evolved to reduce transaction costs, simplify cross-border communications, allow companies to communicate freely with customers and suppliers in any country, and invest free funds away from home [12; 13]. However, current trends in the digital economy also pose a threat of declining investment in the real sector. An example is the active spread of cryptocurrencies, which has led to the transfer of significant amounts of capital from the real economy to the virtual. Funds that could be invested in the modernization of production actually go to the purchase of digital codes. Instead of capital investments, investors invest in virtual ones [14].
According to Bloomberg, citing CoinGecko in 2022 during the pandemic, the total market value of cryptocurrencies has increased tenfold. Analysts named the interest of retail traders- speculators, following the trend of analytical funds and institutional investors, among the reasons for the rapid growth of the market.
On January 5, JP Morgan admitted that bitcoin could rise to USD 146,000 in the long run. Therefore, the negative consequences and threats to the transformation of the financial system may be the
disappearance of the banking system in its classic form, the destruction of the deposit market and funded pension system, radical changes in the labor market and dramatic social changes due to the disappearance of a number of professions. [16]. Changes in the format of functioning of financial systems will consist in the gradual transfer of payment transactions to electronic form, the emergence of new means of payment, the latest payment instruments and systems. At the same time, many of the expected innovations are debatable from the standpoint of regulatory regulation and practical use.
Analysis of investment projects in the field of Fintech and decentralized financial services (DeFralized Finance, DeFi - the name for analogues of traditional financial instruments implemented in decentralized architecture, existing on the blockchain platform, can be composed in different ways tokens) shows that investments based on them [17]:
¦ are available to a wide range of investors with a lower threshold of capital inflow than real estate investments;
¦ allow transactions remotely from anywhere in the world;
¦ are not subject to state bureaucratic procedures;
¦ prevent corruption in this area and the impact of looting;
¦ give a higher level of return on invested capital than bank deposits or investments in securities or insurance savings;
¦ give the opportunity to personally manage the investment portfolio by code;
¦ are anonymous, have high privacy and level of protection;
¦ are flexible and unbound to a particular jurisdiction, operate globally;
¦ today it is outside the strict regulatory framework, and some jurisdictions such as Singapore, Hong Kong, Belize, and the United Arab Emirates are actively supporting these innovations regulatoryly through so-called sandboxes. Regulators around the world have become aware of the need to support new financial technologies through new regulation, the creation of "sandboxes" (regulatory test environment, from the English. Sandbox), the introduction of "flexible licensing approach" for new market participants. The United Kingdom, northern European countries, Lithuania and Singapore are the best examples of supporting new technologies [18]. China has been a leader in financial technology innovation for the next five years. This is confirmed by the fact that the four largest companies in the world in the field of financial technology development are Chinese, namely - Ant Financial (60 billion US dollars), Lufax (18.5 billion US dollars), JD Finance (7 billion US dollars) ), and Qufenqi (USD 5.9 billion). In general, more than 940 companies are actively working in the field of financial technologies in China [19, p. 32]. The UK Gambling Commission has officially added virtual currencies, and bitcoin, to the list of means of payment for licensed online casino websites [20]. As a result, cryptocurrency has significant potential, and the leading countries in this field have great opportunities and a huge resource. For example, there is a form of attracting investment in new technology projects and startups in the form of issuing and selling new cryptocurrencies to investors (initial coin offering). Central banks are also beginning to explore the possibility of issuing them [21].
Table.2.1. perpesents the data on the Top 20 cryptocurrencies are given. Notably, that the threshold for entering the cryptocurrency market is about USD 150.
Table 2.1.Top 20 cryptocurrencies by market capitalization as of 04.02.2022
|
№ |
Coins |
Tiker |
Price, USD |
Market Capital (billionsU SD) |
Turnover by 24 hours (billions USD) |
Market Dominan ce |
24 hours changes |
Total demand ( billions of coins) |
|
|
1 |
Bitcoin |
BTC |
37.947 |
719,04 |
20,64 |
40,79% |
+3,41% |
18.9 |
|
|
2 |
Ethereum |
ETH |
2.836 |
339,94 |
14,95 |
19,22% |
+8,58% |
119.4 |
|
|
3 |
Tether |
USDT |
1,0005 |
77,99 |
45,6 |
4,43% |
+0,01% |
80 074.8 |
|
|
4 |
BNB |
BNB |
378,21 |
62,44 |
1,22 |
3,54% |
+3,53% |
165.1 |
|
|
5 |
USDS |
USDC |
0.9996 |
50,83 |
3,47 |
2.88% |
+0,06% |
50 828.9 |
|
|
6 |
Cardano |
ADA |
1,05 |
35,37 |
0,89 |
2,03% |
+ 1,68% |
34 046.7 |
|
|
7 |
Solana |
SOL |
102,82 |
32,43 |
2,38 |
1,89% |
+6,00% |
511.6 |
|
|
8 |
XRP |
XRP |
0,61 |
29,15 |
1,08 |
1,67% |
+ 1,70% |
99 989.7 |
|
|
9 |
Terra |
LUNA |
49,83 |
19,96 |
1,69 |
1,16% |
+2,10% |
818.1 |
|
|
10 |
Polcadot |
DOT |
19,07 |
18,83 |
0,89 |
1,08% |
+3,94% |
1 103.3 |
|
|
11 |
DodgCoin |
DOGE |
0,138 |
18,38 |
0,37 |
1,05% |
+ 1,66% |
132 670.7 |
|
|
12 |
Awax |
AVAX |
70,32 |
17,23 |
0,71 |
0,99% |
+6.48% |
395.8 |
|
|
13 |
BASD |
BUSD |
0,9988 |
16,13 |
3,31 |
0,92% |
-0,14% |
16 152.9 |
|
|
14 |
Poligon |
MATIC |
1,56 |
11,66 |
0,74 |
0,67% |
+4,15% |
10 000.0 |
|
|
15 |
Shyba |
SHIB |
0,00002 |
11,47 |
0,41 |
0,66% |
+ 1,74% |
589 735 030.4 |
|
|
16 |
TeraUSD |
USDT |
1,00 |
11,29 |
0,35 |
0,64% |
+0,12% |
11 278.4 |
|
|
17 |
Crypto.com |
CRO |
0,40 |
10,25 |
0,09 |
0,59% |
+2,84% |
30 263.0 |
|
|
18 |
Wrapped Bitcoin |
WBTC |
37.582 |
9,96 |
0,33 |
0.57% |
+2.8% |
0.265 |
|
|
19 |
DADA |
DAI |
1,00 |
9,63 |
0,28 |
0,55% |
0% |
9 632.2 |
|
|
20 |
osmos |
ATOM |
28,73 |
8,22 |
1,22 |
0,48% |
+8,04% |
8 304.1 |
Source: created according to the[22].
Bitcoin (BTC) is the undisputed leader in both price and market capitalization. Its capitalization is 65.51% of the market, and the capitalization of the top 10 cryptocurrencies corresponds to 90% of the market. Only three cryptocurrencies (Bitcoin, Ethereum, Tether) already cover 80% of the market in terms of transactions. In total, there are more than 3,000 cryptocurrencies. The most famous virtual exchanges available in Ukraine are Kraken, Bibox, Coinbase, Bitfinex and Gemini, Probit and others.
Analysis of current trends in the development of DeFi projects shows that in 2021 the amount of blocked funds (TVL) in the DeFi sector increased by 1210% - from 18.71 billion US dollars to 245.22 billion US dollars, which is just impressive dynamics given the need to invest in the real sector of the economy (Fig. 2.1). The Ethereum ecosystem continues to dominate. During the year, its TVL grew by 750%, reaching 155.54 billion US dollars. Binance Smart Chain (BSC), Terra and Avalanche were able to regain significant market share in Ethereum. The dominance index of the latter decreased from 99 to 62%.
Fig. 2.1. Dynamics of blocked funds (TVL) in the DeFi sector for 2021 [23].
Due to the active introduction of digitalization and delays in the adoption of the Law of Ukraine "On Virtual Assets" [24], Ukraine has become a leader in the number of cryptocurrency users in percentage of the total population - 12.73%. In total, more than 5.5 million cryptocurrency users in Ukraine. Ukraine ranks first in the world in the introduction of cryptocurrencies (Table 2.2). Ukraine sent cryptocurrencies worth 8.2 billion USD and received
8 billion USD from July 2019 to June 2020, Ukrainians are very open to cryptocurrency and blockchain technology. In particular, the local cryptocurrency exchange Kuna reports that the turnover of small businesses in the crypt can reach 5 million USD per week, while retail cryptocurrencies amount to about 800 thousand USD per day [25].
Table 2.2.Leading countries in the number of cryptocurrencies in% of the total population at the end of 2021
|
№ зп |
Jurisdiction |
Number of crypto owners |
% to the total population |
|
|
1 |
Ukraine |
5,565,881 |
12.73% |
|
|
2 |
Venecuela |
2,941,502 |
10.34% |
|
|
3 |
Keniya |
4,580,760 |
8.52% |
|
|
4 |
The USA |
27,491,810 |
8.31% |
|
|
5 |
South Africa |
4,215,944 |
7.11% |
|
|
6 |
Nigeria |
13,016,341 |
6.31% |
|
|
7 |
Columbia |
3,122,449 |
6.14% |
|
|
8 |
Vietnam |
5,961,684 |
6.12% |
|
|
9 |
India |
10,074,032,000 |
7.30% |
|
|
10 |
Tailand |
362,971,300 |
5.20% |
|
|
11 |
Brasil |
1,037,318,700 |
4.88% |
|
|
12 |
The United Kingdom |
336,059,100 |
4.95% |
|
|
13 |
Pacistan |
905,182,700 |
4.10% |
|
|
14 |
Phillipines |
4,360,579 |
3.98% |
|
|
15 |
South Korea |
1,942,933 |
3.79% |
Source: created based on the [25].
The lack of official data on cryptocurrency investments by citizens does not allow to present a detailed analytical picture of the volume of this market. However, given the high level of profitability of hidden investments in this area (from 5 to 15% per month), full remote format and the ability to communicate with Internet traders, low confidence of traditional banks in traditional banks, taxation of deposits, we can talk about the active spread of this type of investment in Ukraine. This is evidenced by official data on investments in cryptocurrencies of deputies of the Verkhovna Rada of Ukraine. Thus, according to the official publication “Business Censor”, thousands of citizens invest in cryptocurrencies, including government officials. Deputies of the Verkhovna Rada own cryptocurrencies worth a total of 201 million US dollars, which at the rate of the NBU on January 19, 2021 (28.19 UAH / USD) is 5.7 billion UAH. The most popular cryptocurrency, according to their declarations, is Bitcoin, which ranks first in value [26]. Therefore, if statesmen are actively making private investments and storing funds in cryptocurrencies, it is inappropriate to talk about the illegitimacy of its status in Ukraine.
Modern prospects and risks of development of companies in the virtual finance spheare
The main challenge in the context of forming a new generation of investment policy in a pandemic for each country is to develop such postulates and implementation tools that would correspond to the current digital development of the global economy. UNCTAD experts in the World Investment Report emphasize the need to revise the older generation of investment agreements, noting that they are outdated and out of date. After all, companies that actively use digital technologies today can operate without the need for significant physical investment in foreign markets [27].
The prospects for the development of such companies are simply impressive. Given that even in 2020, only 1% of the world owns cryptocurrencies [12]. According to USAID experts in a survey in Ukraine (under the USAID Financial Sector Transformation Project) on the development of fintech and decentralized finance, technology allows financial service providers to reduce costs and gain remote access to consumers, leading to greater financial inclusion. Technology also "opens the door" to the financial services market for new players: mobile operators, e-commerce platforms, messengers, social networks, and other technology giants with a large customer base [18]. Nevertheless, the disadvantages of using cryptocurrencies for investment, which pose a threat to the country's investment security, are high price volatility, risks of currency loss, and uncertain legal status in most countries.
The key risks of development of companies in the field of virtual assets, which cause the existing restrictions on their use are [17]:
¦ use of virtual currencies for illegal transactions;
¦ expansion penetration into the domestic market of foreign fintech;
¦ loss of state monopoly on the issuance of money;
¦ reduction of demand for the national currency, which causes its depreciation;
¦ the impossibility of conducting an effective monetary policy, as the money supply will be partially beyond the control of the regulator;
¦ reducing the level of influence or eliminating financial intermediaries;
¦ the confrontation between the issue and the real demand for virtual currency;
¦ lack of state guarantee of security of cryptocurrency operations;
¦ zero intrinsic value, which can lead to the conversion of virtual currency into a “financial bubble”.
The growing popularity of cryptocurrencies has led to capital being withdrawn from the real economy sector and directed to
digital finance. The development of the virtual financial industry, instant transactions via mobile applications, the growth of contactless payments, licensing of non-banks and financial companies have become commonplace during the pandemic. Analytical studies conducted by Digital Banking Report experts in early 2022 [28] show significant gaps in the transformation of outdated banking systems. The transformation of digital banking has allowed financial companies to focus on improving customer service, expanding data usage and analytics, giving them a competitive edge in the marketplace. Experts note that in 20222023, much attention will be paid to back-office processes that slow down all efforts to transform fintech business into a digital model.
The results of the report assessing the maturity of the fintech companies in the digital transformation in early 2022 identify the main trends in global digital banking, in particular [28]:
- 90% of fintech companies believe that improving interaction with mobile users is extremely or very important;
- other necessary components for development included the need for skilled labor (76% of respondents), open banking APIs (65%) and cloud computing (58% of respondents), respectively;
- priority areas of investment also include the application of automation to back-office processes, the deployment of Internet of Things solutions, the use of blockchain technologies and augmented reality;
- assessing the level of progress of digital transformation efforts, only 14% of companies surveyed indicated that the transformation was "large-scale", indicating additional market needs;
- 43% of surveyed company executives said that the digital transformation was "partially deployed" compared to 63% last year. Another 14% indicated that their efforts had a “limited deployment” (12%) or were at the design stage (6%). Almost one in four institutions (23%) stated that their current deployments were not working properly;
- the close relationship between the "pioneers of innovation" and those firms where the transformation was "large-scale", shows that companies where innovation is a priority, even ahead of their counterparts in the quest to become a "digital bank" and have better financial performance;
- Investment in the transformation of digital banking is increasing, as eight out of ten organizations indicated an increase in customer service (78%), and 72% continue to worry that only half of the surveyed organizations (53%) said they would increase investment in advanced analysts a time when the same firms claim to be the second most important component of digital transformation;
- financial companies praised the productive hybrid model of the workplace, diversity, and inclusive culture of cooperation.
Thus, risk management of fintech companies through increased investment in expanding the channels and processes of digitalization of fintech business is important for further development and transformation in the modern digital age.
In the era of the rapid growth of innovative technologies and quantum computing, the gradual transition of financial transactions into the space of the Metaverse, there may be significant operational risk - security of financial transactions based on blockchain technology for fintech companies [29].
The current challenge for existing virtual firms is to create quantum stable blockchains to protect the financial sector and cross-border transactions, which also includes digital identification to identify individuals, reduce cyber fraud, conduct KYC procedures for customers, create a database for human resources, credit security and investment. Thus, the financial world will continue to move towards digital transformation. The integration of virtual assets, and the Metauniverse into traditional finance will be a key factor in these changes in the coming years.
Analysis of the international financial market allows us to identify the following key forecasts for the implementation of risks for Fintech for the following years:
- the consolidation of fintech firms and banks will continue, the trend of financial mergers and acquisitions will take a new turn in the world, and fintech unicorn companies worth more than 1 billion US dollars will seek new ways to expand and stimulate growth;
- the pace and forms of competition for customers will increase, the uniqueness of digital financial solutions for specific customer segments will be crucial, fintech companies and banks will look for ways to integrate;
- regulatory oversight and compliance requirements will be strengthened as the virtual finance system increasingly goes beyond the traditional regulatory environment and undermines the value of central banks' monopoly rights. In addition, financial transactions with cryptocurrencies can be carried out by transferring traditional bank accounts anonymously from the wallet of their owners;
- each company with a regional network and online applications will implement payment functions and financial services directly for users (Uber, order delivery companies) without intermediaries.
Undoubtedly, these growth trends in the virtual finance industry will not only change the perception of finance and banking in the life of each of us but also rapidly integrate the current paradigm of the financial system into the form of virtual transactions in MetaVerse.
Conclusion
1. Challenges of virtual finance and their impact on the goals of sustainable development of the country through the spread of digitalization of social processes, the development of virtual business, the use of blockchain technology. Based on the analysis of information sources, it is proved that innovative approaches to shaping the behavior of business entities and the economic effects of technology contribute to achieving the goals of sustainable development. At the same time, the Virtual form of realization of investment potential at the choice of investors, guided by the motives of effective investment, creates risks to the stability of public finances.
2. Theoretical and methodological aspects of understanding the essence of virtual finance, the fintech industry, and DeFi projects and their role in the financial system have been further developed. The potential of DeFi companies to provide financial identity to people who do not have access to banks or traditional financial institutions is essential to the global sustainable development community. The lack of official statistics on investments in cryptocurrencies by Ukrainian citizens does not allow us to present an analytical picture of the volume of this market.
3. Recommendations for promising areas of integration of virtual assets into the traditional financial system in the accelerated movement to the digital transformation of society, based on the use of blockchain technology in financial transactions and KYC processes in opening accounts, expanding mobile banking offers using personal.
4. The state policy on investment promotion should take into account the factors of globalization and the new technological system because fintech is able to generate innovative tools to attract financial resources that Ukraine needs in the context of finding alternative sources of funding. Prospects for further exploration will be aimed at finding effective ways to integrate fiat and virtual finance to increase the quality and standard of living of citizens and sustainable development of the national economy in the digital age.
References
virtual finance sustainable development economy
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