Russia’s largest bank, Sberbank, is about to kick off a trial involving cryptocurrencies in cross-border transactions. According to a recent report by Russia’s state-owned news agency TASS this initiative is expected to assist Russian firms in avoiding conventional financial channels that restrict sanctions imposed by the West. The development was announced on 13th November during a blockchain conference with Sberbank’s Deputy Chairman, Anatoly Popov, addressing journalists.
According to Popov, the pilot would commence before the end of the year. He also highlighted the need for the use of stable coins and cryptos in tnternational trade.
“We know that settlements using stablecoins or cryptocurrencies are helpful in foreign economic activity. And we are still in the process of understanding some details of this regulation together with the Central Bank. The first transactions are expected to take place before the New Year.”
Source: FT Energy
Sberbank’s Crypto Pilot Expansion
This current pilot is an extension of a larger attempt to incorporate digital currencies into the Russian foreign exchange. The platform will work within the context of a new legal sandbox that the Russian government recently introduced. The sandbox, or the “Experimental legal regime,” lets the Russian government use cryptocurrencies in some foreign trade transactions.
Sberbank’s crypto push fits into the Russian strategy to defeat the Western sanctions. As the Russian companies can operate business outside Russia by using cryptocurrencies and do not depend on the conventional banking systems. Popov also said that the use of stablecoins and other cryptocurrencies would also be useful in preventing money laundering.
Blockchain-Based Payments
This new pilot is expected to cover cross-border payments that shall be done through tokens on the blockchain system. Such coins can be anchored on certain commodities including real estate, precious metals and many others. Sberbank has earlier signaled it was interested in the broader digital financial assets market.
The pilot project will be conducted in parallel with another initiative of the Central Bank of Russia to create a framework for cross-border cryptocurrency payments. Sanctions have restricted Russian companies following global financial markets and the ability of Russian companies to seek financing on international capital markets.
Sberbank’s new initiative is an enhancement in the growth of the Russian financial sector. It came shortly after President Vladimir Putin signed new legislation. The law allows digital currencies to be utilized in international trade. However, it does not allow such their application in the internal economy of the Russian Federation.
Gref On Crypto Adoption
However, the CEO of Sberbank, German Gref, has recently said that Russia should not rush to embrace crypto innovations. The former Minister of Economic Development, Gref, noted that cryptocurrencies became an indispensable element of trade relations. According to Russia’s state-owned news agency, TASS, he stated:
“Is it possible to use cryptocurrencies for internal transactions? I think not, as long as this is not permitted by law. I do not see any prospects for this to change in the near future.”
He also added that Sberbank would still be involved in the digital ruble project with the Central Bank. Digital ruble is the CBDC of Russia and is being experimented for use in cross border payments. Gref also pointed out that while other countries are also working on similar projects, the success of the digital ruble will be determined by other countries’ recognition of it.
Launch of Digital Ruble In 2025
The digital ruble project is expected to be launched in 2025. Its goal is to provide the population with access to the digital ruble and plan to connect it to the global network further. One of the most important targets is the digital ruble’s interoperability with other digital currencies, including the digital yuan issued by China.
Sberbank’s new crypto-powered pilot significantly advances the Russian effort to disengage from the SWIFT system. However, the effectiveness of these initiatives will depend on the legal framework set by the Russian authorities and partners from the international community.