In an effort to mitigate the effects of Western sanctions, the bank’s move is likely to offer new opportunities.
“We are just starting our work with digital assets,”
said Sergey Popov, director of the transaction business division at Sberbank. He added that the first transaction on its blockchain platform is expected to take place within a month.
Despite the Bank of Russia’s insistence that it is against cryptocurrencies, Russian banks must now look for new ways to minimize the effects of Western sanctions.
Sberbank and Lighthouse, a financial ecosystem, were among the two businesses registered on the central bank’s record, granting them authorization to issue digital assets and exchange them on their platforms. Atomyze Russia, a blockchain platform, was the first to gain legal permission to exchange digital assets in early February.
In a statement, Sberbank emphasized how blockchain technology would guarantee the security of transactions. In addition, companies will be able to issue their digital assets on the bank’s platform and purchase others through it.
Sberbank CEO German Gref previously stated that the bank will collaborate with J.P. Morgan in 2020 to develop its cryptocurrency, which has yet to be launched. According to a report, Sberbank was actively planning to launch its Sbercoin in February, before the invasion and subsequent sanctions.
Following Russia’s invasion of Ukraine in late February, unprecedented Western sanctions have been imposed on the country’s banking sector. Sberbank shares, Russia’s largest bank, have plunged 74 percent in what has become the worst slump in the company’s history.
While many businesses have terminated relations with Russia, it is unclear if sanctions and the crisis have impacted Sberbank’s collaboration with J.P. Morgan or the introduction of Sbercoin.
Investors in Sberbank have been left speculating what its actual worth will be once trading restarts, given that the Moscow market has been closed since the start of the conflict. Sberbank’s Austria unit, on the other hand, was entirely liquidated after massive financial withdrawals rendered collapse inevitable, the EU’s resolution authority stated on March 1.
With Russian banks in distress, it compelled the central bank to step in and supply much-needed liquidity once the war began. The Central Bank of Russia (CBR) established a $10,000 withdrawal restriction until September 9 to stabilize banks after Russians withdrew over 110 billion rubles on the first day of the conflict.
In addition, the CBR raised its primary interest rate, which is akin to the Fed funds rate, to 20% to increase bank deposits. Still, Russian banks are suffering due to Western sanctions, and their current entry into cryptocurrency may be considered another cause for concern by some investors.
Don’t worry, we hate spam too
one weekly digest, just the important stuff.