The Use of Blockchain Technology in Public Administration: Legal Foundations and Foreign Practice

Abstract

Aim. The aim of the article is a comprehensive analysis of the legal framework for utilizing blockchain technology in public administration, specifically the integration of smart contracts into public procurement and the application of virtual asset-based tools (stablecoins, central bank digital currencies) for state settlements, considering foreign practice and European regulatory trends, as well as formulating proposals for improving Ukraine's national legislation in this field.

Methods. The methodological foundation of the research is based on a system-structural approach, which allowed for the consideration of blockchain as a complex infrastructural base for a new model of administration. The use of the comparative-legal method facilitated the study of foreign experience and European initiatives, particularly the EBSI infrastructure. Through the formal-legal method and the method of legal modeling, key conflicts between the technical properties of algorithms and the imperative norms of public law were identified, and frameworks for overcoming them were proposed.

Results. In the course of the study, the concept of "public blockchain-administration" was substantiated as an innovative model of power organization based on the principles of data immutability and automation of administrative procedures. The author's definition of a "state smart contract" was formulated, viewed as an algorithmized form of an agreement where the verification of obligation fulfillment is performed by program code, minimizing the subjective factor and corruption risks in public procurement. A fundamental contradiction was identified between the technical irreversibility of the blockchain and the procedural right of subjects to appeal administrative decisions. To resolve this problem, the introduction of "legal rollback" mechanisms and a clear distinction of responsibility between the algorithm developer and the official were proposed. Particular attention was paid to the financial aspect: the advantages of central bank digital currencies (CBDC) as a secure tool for state treasury settlements compared to private virtual assets were proven. It was established that the use of "programmable money" allows for the implementation of strictly targeted management of budget funds through a system of smart contracts, ensuring the transparency of every transaction.

Conclusions. It is proven that the successful digital transformation of the public sector in Ukraine requires an iterative approach to the integration of blockchain solutions. The priority direction is the creation of "regulatory sandboxes" for testing innovations in a controlled environment. A conclusion was drawn regarding the need to transition from fragmentary regulation to a comprehensive update of the regulatory framework, which will include the legalization of the status of blockchain infrastructures, adaptation of tax and budget codes to operations with virtual assets, and the implementation of European data protection standards in distributed ledgers. The implementation of the proposed steps will allow transforming blockchain from an experimental technology into an effective tool for ensuring trust between the state and society, increasing the efficiency of public governance in conditions of global digitalization.