Sberbank

Blockchain is the answer to Russia’s settlement issues, banking exec says

There is no technical reason preventing Russia from creating its own blockchain-based system, blockchain provider Fuse Network’s CEO believes.

The adoption of blockchain is the right direction for Russia to solve its current settlement issues, according to an executive at Russia’s largest bank, Sberbank.

Blockchain technology has matured over the past few years to offer new capabilities that potentially enable Russia to create more efficient payment systems, Sberbank first deputy chairman Alexander Vedyakhin said.

On March 14, Vedyakhin took part in the meeting of Russia’s Federation Council on the budget and financial markets committee, highlighting the promising future of blockchain in Russia, the local news agency Interfax reported.

According to Vedyakhin, distributed ledger technology (DLT) is a great foundation for a new payment system due to its decentralized nature and privacy-enabling features. He stated:

“Because it’s a distributed ledger, there is no single point of decision-making, no center, no switch that can be turned off; everyone has records of everything, and there are special protocols that allow you to do this confidentially.”

Vedyakhin added that Sberbank is currently actively exploring the implementation of blockchain technology for payments. “We are confident that Sberbank and other colleagues from the central bank will find this solution,” he stated, expressing confidence that blockchain will become more relevant in 2023. The Sberbank executive said:

“Next-generation payment systems will be on blockchain.”

In his speech, Vedyakhin also noted that blockchain technology has rapidly evolved over the past few years, with developers managing to find solutions to issues, such limited scalability and limited privacy. These blockchain issues have been solved so far, he added.

According to Mark Smargon, CEO of the permissionless public ledger project Fuse Network, there is no technical reason preventing Russia from creating its own blockchain-based system.

“Major adoption by mainstream businesses and their consumers is right around the corner thanks to recent developments in scaling and privacy technology, notably on EVM [Ethereum Virtual Machine]-compatible systems, which have become the standard for experimentation,” Smargon said in a statement to Cointelegraph.

He noted that fully online real-time technology for cross-border payment settlement is “only a matter of time,” with technology significantly maturing over the past few years. At the same time, Smargon questioned whether blockchain could enable economies to bypass international sanctions, stating:

“It needs to be clarified when this technology will become widely adopted and whether it will enable users to bypass international sanctions. Blockchain enables better transparency, and disintermediation is not only a solution for illicit activities.”

The news comes amid Sberbank finalizing its Ethereum-based decentralized finance platform, which it plans to trial by May 2023. Russia’s largest bank has also been working on an international settlement platform that would serve as an alternative to SWIFT. According to Sberbank CEO German Gref, the company plans to finalize its configuration in 2023.

Russia’s Sberbank plans to launch DeFi platform on Ethereum

DeFi systems are able to displace the traditional market of banking services, Sber’s Blockchain Lab product director Konstantin Klimenko said.

Russia’s largest bank, Sberbank, is moving forward with the plan to launch its decentralized finance (DeFi) platform, preparing to trial the product in a few months.

Sberbank expects to launch open trials of its DeFi platform by May 2023, Sber’s Blockchain Lab product director Konstantin Klimenko announced, the local news agency Interfax reported on Feb. 3.

Currently being tested in private beta, Sberbank’s upcoming DeFi platform will be fully open by the end of April, enabling users to conduct the first commercial transactions, Klimenko said.

The executive noted that the blockchain platform will be compatible with the Ethereum blockchain, allowing customers to use major wallets, such as MetaMask, to move their assets. Klimenko also noted that users will be able to transfer their assets from other platforms.

The blockchain executive stated that Sberbank’s DeFi platform aims to become a prime DeFi ecosystem in Russia. He also expressed confidence that DeFi systems are able to displace the traditional market of banking services.

The announcement comes in line with Sberbank’s previously disclosed plans to enable DeFi applications on the bank’s infrastructure. In November 2022, Sberbank announced a set of new features for its proprietary blockchain platform, including compatibility with smart contracts and applications on the Ethereum network.

It appears to be unclear how the upcoming platform is going to be regulated because Russia is yet to come up with digital currency regulation. According to Anatoly Aksakov, the head of the Duma’s Committee on Financial Market, Russia will “definitely” adopt crypto regulations in 2023.

As previously reported, Sberbank was struggling to launch some blockchain tools over the past few years due to multiple delays of registration by the Russian central bank. Originally expecting to launch its digital asset issuance platform in 2021, Sberbank eventually received the Bank of Russia’s approval in spring 2022. The Russian government is the majority shareholder in Sberbank, holding 50% + 1 share.

On Feb. 2, Alfa Bank, one of the largest private banks in Russia, became the fourth financial institution in the country allowed to issue digital assets alongside Sberbank, the state-backed tokenization platform Atomyze and fintech company Lighthouse.

Russia’s largest bank issued gold-backed digital financial assets

The issuance became the second major operations of the bank with the new class of assets.

Russia’s largest bank Sber — formerly known as Sberbank — reported the first issue of gold-backed digital financial assets (DFAs). The bank considers DFAs to be a “great alternative” to investments amid dedollarization.

On Dec. 26, Sber published the news about its first issue of gold-backed DFAs. A diversified metals seller and manufacturer, Solfer, became the first investor to obtain the issued assets. Gold-backed DFAs represent certifying monetary rights, whose price and volume depend on gold prices.

According to juridical documentation of the issuance, the bank will provide up to 150,000 DFAs for potential investors to buy. The DFAs will be available to acquire until Jul 30, 2023. The document mentions “the high risks” for investors, ingrained in such kind of assets, including “the risk of illiquidity.”

The first deputy chairman of the Executive Board at Sber, Alexander Vedyakhin, claims these kind of DFAs to be an alternative to traditional investments amid the dedollarization, caused by the international financial sanctions, imposed on Russia in the aftermath of its invasion to Ukraine:

“We expect the number of corporate clients on our platform to grow rapidly and plan to expand the product line of digital financial assets.”

While current legislation on the DFA was put in force in 2020, in July 2022 Russian President Vladimir Putin has signed a bill into law prohibiting digital financial assets as payments method.

In June, a subsidiary of another Russia’s state-owned bank, VTB Factoring, reported its 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. Sber has tested its first deal involving DFAs later in July, issuing the three-month assets valued 1 billion roubles (around $14.5 millions by press time).

Russia’s Sber bank integrates Metamask into its blockchain platform

Russia’s largest lender is moving into DeFi and Web3 by integrating its blockchain platform with the Ethereum blockchain.

Russia’s largest bank Sber — formerly known as Sberbank — continues developing its blockchain platform by integrating it with the Ethereum blockchain.

On Nov. 30, Sber officially announced new opportunities for its proprietary blockchain platform, including compatibility with smart contracts and applications on the Ethereum network. This would allow developers to move smart contracts and entire projects between Sber’s blockchain and public blockchain networks, the bank said.

Sber’s latest additions also bring an integration with major software cryptocurrency wallet MetaMask, which is used to interact with the Ethereum blockchain. The integration allows users to make operations with tokens and smart contracts placed on Sber’s blockchain platform, the announcement notes.

“Sber Blockchain Lab works closely with external developers and partner companies, and I am glad that our community will be able to run DeFi applications on Sber’s infrastructure,” head of blockchain lab Alexander Nam said. He noted that the newly integrated features will help Sber to unite developers, corporations and financial institutions to explore practical business applications of blockchain, Web3 and decentralized finance.

As previously reported, Sberbank has been actively developing blockchain products in recent years, filing an application with the Bank of Russia to launch a blockchain platform for its “Sbercoin” stablecoin in early 2021. After receiving the central bank’s approval in spring 2022, Sber finally announced its first digital currency deal in June. Sber’s majority shareholder is the government of Russia, holding 50% + 1 share.

Sber’s announcement came shortly after Russian President Vladimir Putin called for an open blockchain-based settlement network. He criticized the monopoly in global financial payment systems, expressing confidence that digital currencies-based technology will drive independence from banks. At the same time, Putin’s government does not allow its citizens to use crypto as payment, putting a blanket ban on payments with Bitcoin (BTC) in early 2020.

In late November, Russian lawmakers also discussed potential legal amendments in order for the government to launch a national crypto exchange. This effort is reportedly supported both by the Ministry of Finance and the Bank of Russia, which are known for having a lot of disagreement when it comes to regulating the local crypto market.

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.