Digital Evolution: a New Age of Comfort or a Gateway to Invisible Threats?

The world is now changing faster than ever before in human history. One of the key drivers behind this rapid transformation is the development of innovative technologies, supported globally at all levels — from investors and businesses to governments and international organizations.

Many technologies once confined to science fiction are now reality: quantum computers, humanoid robots, generative artificial intelligence, virtual reality, and more. With each generation, humanity is immersing itself more deeply into the digital world, gradually shifting nearly all aspects of social interaction into virtual space — from personal relationships to professional and business activities.

Key Risks of Rapid Technological Development

There is no doubt that the digitalization of our everyday lives offers many advantages. However, global experts have also identified significant risks associated with this technological boom. In particular, the rapid expansion of technologies such as artificial intelligence and electronic transactions with virtual assets is already contributing to many of the global threats outlined in the latest Global Risk Report, which was published on 15 January 2025.

Based on insights from more than 900 international leaders and experts worldwide, the report highlights, among other things, the following key threats:

• Increased risk of armed conflict;
• Misinformation and disinformation;
• Cyber espionage and warfare;
• Violations of human rights and civil liberties;
• Concentration of strategic resources and technologies in the hands of a small number of individuals, businesses, and states;
• Virtual asset bubble burst.

These risks are not abstract — they shape the regulatory challenges businesses face when entering or scaling in digital-first economies.

One of the key contributors to these threats is the lag in implementing effective legal frameworks. Laws that could mitigate these risks often come into effect long after new technologies have already been widely adopted. In addition, public awareness remains low regarding how these technologies work, the risks involved, and ways to manage them effectively.

As a result, several negative trends have emerged in the use of innovative technologies:

• Growth of cybercrime;
• Systemic violations of intellectual property rights;
• Personal and confidential data leaks;
• Security threats and risks to human life due to flawed AI decisions;
• Increase in fraudulent schemes in cyberspace.

To understand the real-world consequences, consider a few high-profile recent cases.

In Hong Kong, an employee of a multinational corporation was deceived during a video call involving AI-generated participants, including a simulated version of his supervisor. He transferred $25 million at their request.

In 2022, the FTX crypto exchange diverted $32 billion worth of users’ funds through its investment fund, claiming it was for charity. The exchange owner was arrested and later released on USD 250 million bail. The investigation is still  ongoing.

That same year, the North Korean cybercrime group Lazarus reportedly stole hundreds of millions of dollars in cryptocurrency, although the prosecution failed to secure a conviction.

Ukraine’s Role in the IT Landscape

These risks are especially relevant for Ukraine. The country has embraced digitalization and the use of emerging technologies across many sectors. For instance, in 2024, the state app Diia was named one of Time magazine’s “The Best Inventions of 2024.” That same year, Ukraine ranked 6th globally in cryptocurrency adoption (according to the Chainalysis Global Crypto Adoption Index) and 2nd in Eastern Europe in terms of crypto transactions.

However, the Ukrainian legal framework for technologies such as virtual assets and artificial intelligence remains significantly underdeveloped, not only relative to their extensive usage but also compared to other leading countries. Therefore, despite impressive adoption metrics, the lack of comprehensive regulation presents both challenges and opportunities for foreign businesses and investors.

Virtual Assets: Innovation Outpacing Regulation

Ukraine’s Law On Virtual Assets, adopted in 2022, has not yet come into force. Its enactment is tied to the adoption of a corresponding law amending the Tax Code, which is still under review in the form of several alternative drafts.

Its adoption is expected by the end of 2025. Key discussions focus on taxation, regulatory framework, alignment with EU laws (MiCA, DORA, DAC8, AML Directive), and identifying the primary market regulator.

Due to differing positions among stakeholders, such as the National Bank of Ukraine, the NSSMC, the Ministry of Digital Transformation, and the Verkhovna Rada (Parliamentary) Committee on Finance, full-scale regulation may not begin until 2026.

Without effective legal frameworks, Ukraine risks losing budget revenue, seeing a reduction in investor confidence and limited legal protection for businesses and users alike.

Among the most pressing risks are the following:

• Limited legal protection in cases of fraud or loss of access to digital assets;
• Increased exposure to fraudulent investment schemes and scams;
• Legal uncertainty surrounding cryptocurrency transactions;
• Tax risks due to unclear regulatory guidance;
• Bank servicing issues, including delayed or blocked transactions.

In the end, Ukraine may suffer from reputational damage: the lack of legal legitimacy could associate the Ukrainian crypto market with “grey zones” and potential money laundering.

Artificial Intelligence: Legal Alignment in Motion

Artificial intelligence is already integrated into many sectors in Ukraine and around the world. Yet, many people remain unaware of its presence in their daily lives, even as they routinely use chatbots, facial recognition systems, smart home devices, and AI-powered tools like ChatGPT.

As AI technologies evolve rapidly, advanced countries are racing to implement robust legal frameworks. On March 13, 2024, the European Parliament adopted the AI Act — a foundational regulation for AI governance across the EU. This regulation is already shaping AI compliance expectations across Europe — a trend Ukraine is following in order to align its legal framework with international standards.

In June 2024, Ukraine’s Ministry of Digital Transformation presented a “White Paper” outlining the future of AI regulation. While not legally binding, it reflects the government’s strategic direction and proposes voluntary tools to support ethical AI use. Its three core objectives are to:

1. Strengthen the competitiveness of Ukrainian businesses;
2. Safeguard human rights;
3. Accelerate Ukraine’s integration into the European Union.

The Ministry of Digital Transformation advocates a liberal approach, aiming to pass comprehensive legislation within 2–3 years.

Meanwhile, the government is already developing foundational systems, including regulatory sandboxes for IT products, AI risk assessments, AI labeling protocols, and voluntary codes of conduct. As part of its alignment with EU digital policy, Ukraine plans to centralize AI governance tools via a one-stop web portal, where users will be able to download the Road Map and White Paper and access these support tools.

In February 2025, Ukraine launched the Center for the Development and Implementation of AI for the State, Business, and Education.

Cybersecurity: the Key to Staying Safe in the Digital World

Every Ukrainian company that values its security must stay alert and proactively assess its digital vulnerabilities.

Key steps for building operational cyber resilience include:

• Installing advanced cybersecurity and data traffic monitoring systems;
• Using only licensed software and keeping all systems updated;
• Conducting routine cyber audits to identify and address weak points;
• Backing up data in multiple regions or countries, especially crucial for companies in Ukraine in wartime;
• Monitoring evolving threats and adjusting internal security policies accordingly;
• Reporting suspected cyber incidents to government authorities.

Our experience shows that ensuring resilience against cyberattacks requires not only modern hardware and software but also expert support. Cybersecurity is not a one-time setup — it should be treated as a continuous business process. Every business owner should embed it into operations and strengthen it by involving both technical specialists and legal professionals.

An experienced cybersecurity lawyer is able to:

• Ensure cloud service providers comply with national and international standards by drafting contracts that safeguard corporate data;
• Develop internal policies for safe digital practices;
• Conduct regular training sessions for employees to clearly explain the rules for handling personal data and confidential information;
• Respond to incidents by filing complaints with authorities, seeking legal accountability, and initiating claims for damages.

In these situations, it’s crucial to preserve critical data and isolate infected devices in order to help identify cyberattackers and prevent future breaches.

To sum up, digital transformation is reshaping economies and business operations around the world at an unprecedented speed. While it opens new markets and enhances efficiency, it also brings evolving legal, regulatory, and cybersecurity risks, particularly in emerging markets like Ukraine, where rapid tech adoption has outpaced legal safeguards.

As new laws on virtual assets and artificial intelligence continue to take shape, companies need to navigate a complex and shifting environment. With the right legal support, businesses operating in Ukraine can mitigate risks, ensure compliance, and turn digital uncertainty into a long-term strategic advantage.