Rosbank Launches First Cryptocurrency Cross-Border Settlement Service in Russia
Rosbank, one of Russia’s major banks, has made headlines by becoming the first Russian bank to launch a cryptocurrency cross-border settlement solution. This move comes despite the bank facing sanctions from the United States.
The innovative service allows Russian companies to use cryptocurrencies to pay for imported goods and services. However, in order to utilize the service, these companies must pass the Know Your Client (KYC) procedures set by both Rosbank and B-crypto, a Russian fintech service specializing in international payments using digital currencies.
According to a representative from Rosbank, the bank has already begun conducting pilot transactions with both corporate and private clients. The technical support for cryptocurrency settlements is provided by B-crypto, ensuring a smooth and secure process for cross-border transactions.
To initiate a cryptocurrency settlement, a Russian company must include provisions for such payments in their contract with the foreign supplier. The recipient’s crypto wallet must be registered and the supplier will issue an invoice indicating the cryptocurrency payment and the corresponding wallet address.
Once these initial steps are completed, the importer and B-crypto enter into an agreement. The customer deposits fiat funds into an account with Rosbank and submits an application. The bank then transfers the funds to B-crypto, which purchases the required cryptocurrency from friendly countries and transfers it to the foreign supplier.
The introduction of this service by Rosbank has set it apart from other major banks in Russia. While the publication reached out to the top 50 Russian banks, none of them confirmed offering similar services. According to Alexey Voylukov, the vice-president of the Association of Banks of Russia, cross-border cryptocurrency transfers are typically the domain of smaller banks. Larger credit institutions have shown limited interest due to concerns about the availability of sufficient cryptocurrency liquidity to serve the needs of their large clients.
There are also concerns about the potential for circumventing sanctions through the use of cross-border cryptocurrency transfers. Eduard Davydov, a senior partner at Emet Law Firm, pointed out that many countries are taking steps to include cryptocurrency transactions in their sanctions regimes. Therefore, the use of cryptocurrencies to bypass sanctions could be deemed illegal and result in legal consequences for those involved in such operations.
Despite these concerns, there is a growing recognition that cryptocurrencies have the potential to play a role in international payments. First Deputy Chairman of the Bank of Russia, Vladimir Chistyukhin, believes that while cryptocurrencies will not solve all the challenges in international payments, efforts should be made to explore and utilize various means of settlement with foreign partners.
In fact, the Russian government is currently considering a bill to legalize mining and establish experimental legal regimes. Once these initiatives are adopted, the Central Bank plans to commence testing cross-border payments using cryptocurrencies mined by authorized organizations.
While Rosbank’s cryptocurrency cross-border settlement solution marks a significant milestone in the Russian banking sector, the service’s long-term viability will depend on various factors, including regulatory developments, liquidity concerns, and adherence to international sanctions. As the landscape of digital currencies continues to evolve, it remains to be seen how financial institutions and regulators will navigate the opportunities and challenges presented by cryptocurrencies in cross-border transactions.
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