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- 1 One of the biggest banks in Russia, Rosbank, is reportedly looking for international payments settlements.
- 2 The bank is surprisingly seeking trade in cryptocurrencies.
Although the stance of Russia towards crypto has been mixed, the central bank has prohibited the use of digital assets inside the country. But because cross-border payments were not included in the forbidden activities, Rosbank has found an opportunity.
Russian news outlet, Vedomosti, citing a representative, reported Rosbank to be the first to launch cross-border crypto settlements. The bank has ensured to comply with the obligations of the Bank of Russia and regulatory compliance. It is involved in pilot transactions which involve corporate and private clients.
Vice President of the Association of Banks of Russia, Alexey Voylukov, noted there are no official projects running in the region among other large banks akin to Rosbank. The news outlet also confirmed the same with at least top 50 banking institutions which denied any such operations.
Internal Sanctions in Russia not Hindering Outer Operations
In Russia, digital assets do not hold any legal permission for the circulation. The digital financial assets (DFA) restricts citizens to accept crypto payments in exchange of goods and services. But there is no similar blockade on cross-border transactions, which leaves room for using the assets for international trade, away from Russian infrastructure.
Last year, the United States Treasury Department put a sanction on Rosbank and its owner, a Russian oligarch named Vladimir Olegovich Potanin. Bloomberg reported Potanin to be the richest man in Russia. The sanction from the Treasury came in the wake of the Russian invasion of Ukraine.
For assistance in the new initiative, Rosbank shook hands with fintech services provider, B-crypto. The firm specializes in the crypto cross-border settlements, and is said to provide technical support to the bank customers.
B-crypto CEO, Evgeny Kaplin reportedly stated that in the ongoing pilot phase of the project, the firm facilitated a “technological, legal and operational infrastructure” for foreign economic activity (FEA) participants. It uses the distributed ledger technology, or blockchain technology, while maintaining compliance with the existing financial laws.
During the pilot phase, it was seen that when a Russian company which imports goods or services and needs to pay the foreign entity in cryptocurrency, the entity would need to provide the crypto wallet details. The supplier entity would also need to issue the invoice with the description of sold goods or services to the company in Russia. The amount to be paid in crypto and address of the crypto wallet were also to be provided.
Following the application with Rosbank, the customer deposits the fiat money funds equivalent to the crypto in the account with the bank. The money then moves to B-crypto which buys cryptocurrency out of Russia, and then directs the assets to the foreign supplier. Both the bank and technical support provider seek to know your customer (KYC) obligations from the foreign entity.
The commission in the process as well as what specific cryptocurrencies were to be used for the operations by the bank is not known yet.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
