Russian Sberbank (Sber), the largest Russian banking and financial services company with more than 100 million customers, has recently announced its plans to issue its own digital currency named Sbercoin. The bank has also sent an application to the Central Bank of Russia for the approval of Sber’s own blockchain-based digital asset service platform at the beginning of 2021. Should the approval process pass through all necessary examinations and trials, it is anticipated that Sbercoin will be officially launched within March 2021.
Digital Currencies Permitted in Russia From January 1st 2021
Following on from an announcement released last year, Digital financial assets will be permitted to legally circulate in Russia from January 1st 2021. Digital financial assets include cryptocurrencies, however, the most traded cryptocurrency worldwide, Bitcoin, is not listed among the currencies approved for circulation in Russia.
Despite the law recognizing the existence of Bitcoin and other digital tokens, it does not remove restrictions which prevent individuals from using such cryptocurrencies as legal tender.
It is also indicated that the official global fiat currencies still carry more rights than that of their crypto counterparts. Moreover, only financial institutions that have passed authorization by the Russian Central Bank, and Russian stock exchanges will be certified to authorize any cryptocurrency transactions.
At the time of the passing of the bill last year, it was largely anticipated that certain Russian financial services companies would launch their own tokens at the start of 2021, Sberbank has acted as a pioneer in this respect.
Sbercoin in focus
Sbercoin has been undergoing a number of internal trials as reported by the bank’s management. As under the new cryptocurrency law of Russia, the digital financial assets are only allowed to be firstly implemented on certified platforms, while Sber has already put forward its ambitions to launch its own platform. Moreover, it was earlier reported that in order to proceed with the development of its own digital currency, Sberbank has partnered with JP Morgan which in turn has experience in developing its own cryptocurrency, JPM Coin.
Sbercoin is expected to be first issued in the form of a stablecoin. A stablecoin is a type of cryptocurrency that is pegged to either a traditional fiat currency or physical commodity, e.g. oil or gold. Sbercoin stablecoin pegged to the Russian rubble can become the foundation for settlements which involve other digital assets.
Sberbank Shifts to Fintech
Recently Sberbank has been actively involved in many blockchain projects. For instance, the bank partnered with Russia’s S7 Airlines (the largest domestic airline in the country) in order to work on automotive travel agency payments. Such payments would be executed using blockchain technology and smart contracts. A travel agent using an account in Sberbank can tokenize and transfer money in his/her account to S7 Airlines.
Furthermore, Sberbank has also joined the Komgo network last September. Komgo is a blockchain trade network that specializes in trading commodities, where Russia is a major global trading player, in particular in the trading of oil and gas.
Conclusion
In the next coming months, the first official digital coin is likely to debut in Russia. The updated laws and regulations which permitted legal circulation of digital financial assets will allow many large financial institutions to launch its own cryptocurrencies that can be used for settlements in Russia. The digitalization will further strengthen the security and stability of the domestic currency and will provide for a more secure and faster execution of payments domestically.
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