Russia

VTB sealed the first deal with digital financial assets in Russia

VTB Factoring acquires a tokenized debt pool of industrial companies via the Lighthouse blockchain.

VTB Factoring, a subsidiary of Russia’s state-owned bank, reported the first major deal with digital finance assets. As part of the deal, the bank subsidiary acquired a tokenized debt pool of the engineering company Metrowagonmash, issued via the fintech platform Lighthouse.

On Wednesday, June 29, VTB reported the deal on its webpage, claiming it to be the first issuance and placement of digital financial assets secured by cash in the Russian Federation. In the announcement, the bank compares it with the issue of short-term commercial bonds.

Anton Musatov, CEO at VTB Factoring, emphasized the new technology’s potential regarding the access of Russian businesses to the funds necessary for operational activities:

“Apart from the standard factoring procedure, [here] a client shouldn’t necessarily sign a service contract to sell its debt pool. The issuer’s readiness to tokenize it and the factoring bank’s decision to acquire it.”

In June 2022, the largest Russian bank Sber announced its first operation with the digital financial assets (DFA) to take place in mid-July, after finally obtaining a license from the country’s central bank.

While current legislation on the DFA was put in force in 2020, the head of the Financial Markets Committee of the Russian parliament’s lower chamber introduced a bill that would prohibit the use of DFA as a “monetary surrogate” in June 2022.

In February 2022, VTB conducted the first successful testing of the operation with “digital rubles,” a central bank digital currency (CBDC) project of the Bank of Russia. Later, the bank announced its first purchase of DFAs in exchange for the digital ruble. At press time, there is no information on whether the aforementioned deal was made via CBDC.

Bank of Russia backs cross-border crypto payments vs. domestic trade

Cryptocurrencies can be used in cross-border or international payments only if they don’t get into Russia’s domestic financial system, the Bank of Russia governor said.

Russia’s central bank governor Elvira Nabiullina is the latest official to confirm that the country is warming to the idea of cryptocurrency payments, but not domestic ones.

According to Nabiullina, cryptocurrencies can be used in cross-border or international payments only if they don’t get into Russia’s domestic financial system.

The digital currency should not be used as payment on platforms inside Russia, the Bank of Russia governor said in an interview with the local news agency RBC. That is why cryptocurrency prices are too unstable or volatile, thus risky for retail investors, Nabiullina argued, stating:

“Cryptocurrencies should not be traded on organized marketplaces because these assets are too volatile, too risky for potential investors.”

Nabiullina went on to say that digital assets must comply with all requirements and policies created to protect investors. As such, all assets that are listed on an exchange must have an emission prospectus and a responsible person as well as comply with information disclosure requirements.

The governor previously called on the government to focus on encouraging the development of digital asset projects that are being issued by a responsible person in April. She contrasted such a vision to private cryptocurrencies like Bitcoin (BTC), which don’t have one responsible party, while Bitcoin’s creator has not been identified at all.

Nabiullina’s latest remarks provide another confirmation that Russia might be preparing to start using cryptocurrencies for international trade. In May, first deputy governor of the Russian central bank Ksenia Yudaeva claimed that the Bank of Russia was open to allowing the use of cryptocurrency for international payments.

In October 2021, Russian President Vladimir Putin declared that it was “still premature” to use cryptocurrencies for settling trades of energy resources such as oil.

While growing increasingly interested in international crypto payments, the Russian government has been also doing its best to prevent Russians from using crypto as payment insi the country. After officially banning crypto payments as part of Russia’s major crypto bill in January 2021, the local lawmakers on Tuesday passed in the first reading another bill to prohibit the use of digital financial assets.

Russian bank Sber to complete its first digital currency deal

Sber was initially planning to launch its blockchain-enabled digital asset platform and the Sbercoin stablecoin by spring 2021.

Russian banking giant Sber — formerly known as Sberbank — is preparing to complete its first digital currency deal involving the bank’s proprietary digital asset platform soon.

The bank will conduct its first transaction involving digital financial assets (DFA) on its digital asset issuance platform by mid-July.

Anatoly Popov, deputy chairman of Sber’s executive board, disclosed Sber’s plans to complete such a deal in an interview with the state-backed news agency TASS on June 15.

Popov claimed that Sber finally received registration from the country’s central bank — the Bank of Russia — in spring 2022, following a series of registration delays. Sber has been struggling to register its digital asset issuance platform, initially expected to launch alongside its Sbercoin stablecoin by spring 2021.

While the latest news doesn’t directly mention the application of blockchain on Sber’s platform, Popov noted that the bank is committed to exploring the technology, stating:

“We are looking closely at the development of new technologies like distributed ledger technology. We are studying how blockchain technologies are developing. Our platform has already passed acceptance tests, and the first transaction will take place within a month.”

The news came in conjunction with VTB — Russia’s second-largest bank — also preparing to test the purchase of DFAs in exchange for Russia’s central bank digital currency, the digital ruble, in September 2022. VTB’s board member Svyatoslav Ostrovsky reportedly announced plans to launch a new platform to buy digital rubles at the Saint Petersburg International Economic Forum on June 15.

The Russian parliament passed a new bill in the first reading to prohibit the use of DFAs as payment for goods and services on Tuesday.

Bill to ban digital assets as payment passed the first reading in the Russian parliament

The document bears several conceptual contradictions, trying to qualify security tokens as a monetary surrogate.

A bill that had been introduced a week ago to the State Duma, the lower chamber of Russian Parliament, made a swift passing through first reading. Should it become a law, it would prohibit using “digital financial actives” (DFA) to pay for goods or services.

As reported by local media on Tuesday, the bill, sponsored by the head of the Financial Markets Committee of the State Duma Anatoly Aksakov, passed with a reservation. Albeit the document suggests an obligation for DFA exchange managers to withhold any deals implicating the usage of tokens as a monetary surrogate, the prohibition could be ceased in cases “prescribed by federal laws.”

Earlier legal professionals have criticized the bill for tightening the regulation of digital rights and tokenized assets. One of the main conceptual problems is that the bill treats the DFAs, known as tokens and not cryptocurrencies, as a payment method while they are generally being used as security tokens. Another lacuna is the term “monetary surrogate” — while the bill intends to prohibit to use DFAs as a monetary surrogate, there is no clear definition of the latter in Russian laws.

The bill also introduces the concept of an “electronic platform,” which is loosely defined as a financial platform, investment platform or information system in which digital financial assets are issued. Electronic platforms would be recognized as the subjects of the national payments system and obliged to submit to the central bank’s registry. Every major operation with DFAs — their emission, circulation, exchange and trade — would get its own registry.

The existing law on Digital Financial Actives came into force in 2021. In May 2022, the tax amendments on DFAs passed the first reading in the State Duma. In a separate development, two other important bills are continuing their journey through the legislative process. A bill “On Digital Currency” would define the regulatory framework for crypto in general, while a bill “On Mining in the Russian Federation” should set the guidelines for miners.

Bitcoin at the WEF: What did the world’s elite think of crypto?

In a Cointelegraph video, the world’s elite and some crypto believers rub shoulders to share their views on crypto.

Cointelegraph introduces “Crypto Street,” a series of spontaneous conversations with strangers on the street to educate, entertain and take a temperature check on the world’s relationship with crypto.

The first episode comes from the gates of the World Economic Forum (WEF) in Davos, Switzerland. Cointelegraph reporter Joseph Hall attempted to speak with the world’s elite where he was rejected, ridiculed, and ignored before stumbling across crypto believers among the WEF attendees.

Sporting a Cointelegraph sweatshirt with the loudest Bitcoin (BTC) logo, Hall asked passersby to guess what was print represented. Some WEF-goers refused to talk on camera while others claimed ignorance.

“That’s not Bentley, it’s Bugatti!” One passerby at the World Economic Forum joked. That, or they genuinely believed that the Bitcoin logo is a luxury car brand.

The shoot then moves to the blockchain streets of Davos, where cryptocurrency companies outweigh the tradfi presence. Irina Heaver, a crypto lawyer and Bitcoin believer told Cointelegraph that Bitcoin is “freedom.” She explained that for her family:

“When the Soviet Union Collapsed, they were left absolute penniless — so did millions of other people […] If they could have some of that (Bitcoin) can you imagine how their families would be better off?”

Heaver also explained that more and more Russians transact with Bitcoin and crypto, reflecting the growing popularity of cryptocurrency in the country. WEF attendees from India, where crypto education is weak at best, explained that the “younger generation is a lot more curious about Bitcoin and cryptocurrency.”

“Some rethinking and action need to happen to make it [crypto] more sustainable.”

The International Monetary Fund is close friends with the WEF, and it consistently pushes for central bank digital currencies as well as moving cryptocurrencies away from proof-of-work blockchains to less energy-intensive proof-of-stake blockchains.

There’s also a cameo from Nas Daily, the Youtuber and Bitcoin HODLer who lost $200,000 on Bitcoin to date. He appears on camera and exclaims, “I lost so much money.”

Finally, there’s also a Golden Retriever who holds his tongue regarding Dogecoin (DOGE) price predictions for 2022, and an acapella rendition of Nina Simone by up-and-coming vocalist, Evan Klassen. Incidentally, Klassen is signing at the FIFA World Cup in Qatar this year; will he croon a crypto tune?