The Central Bank of Russia is against the integration of cryptocurrencies into the country’s monetary system. The financial regulator does not see the possibility of using Bitcoin and other coins as a payment method in the country.
But as cryptocurrency becomes more and more popular in Russia, will there be a compromise between the banks and Russian citizens in the future?
The realities of the 21st century
Despite the difficult economic situation in Russia, the most influential banks in the country are in no hurry to end or restrict investment activities. This is not surprising, since only competent investments in promising areas will improve the well-being of commercial banks in the future.
Of course, perhaps the most attractive investment opportunity today is cryptocurrencies. In particular, investors are interested in financial and technological start-ups that significantly impact modern banking.
The integration of the fruits of technological progress into the banking industry makes it possible to perform all settlement processes, including transactions, much faster. In the end, all this contributes to the improvement of the economic climate.
Banks in Russia are part of a two-tier system, the upper level of which is represented by the Central Bank of Russia and the lower level by credit organisations (banks and non-bank credit organisations) and representative offices of foreign banks. Banking in Russia is a licensed activity.
Cryptocurrencies do not threaten the monetary system of the Russian Federation. However, the Central Bank of Russia is against their legalisation and use as a payment instrument. But what do the largest Russian banks think?
Public joint-stock company Sberbank is a Russian financial conglomerate. It is the largest transnational and universal bank of Central and Eastern Europe. It is controlled by the Central Bank of Russia, which owns 50% of the share capital plus one voting share.
The President of Sberbank, German Gref, has been very loyal to cryptocurrency and blockchain technology, even if the Central Bank of Russia is against it. He believes that cryptocurrency is the future of money and he wants Sberbank to be a leader in this industry.
German Gref has admitted that he owns a small number of Bitcoins. He also urged the government not to prohibit cryptocurrency in Russia as it’s impossible to stop its development and growth, so it would be best to get involved now. “Those who will ban will lose; this is a huge market,” said Gref.
Sberbank plans to conduct cryptocurrency trading through its subsidiary in Switzerland – Sberbank Switzerland AG. Russian legislation does not allow trading with cryptocurrency, while Swiss laws do allow it. Commenting on the move, Andrei Shemetov, vice president of Sberbank, claims the company wants to satisfy the interests of its customers, so it’s logical they should have access to all types of services and products.
According to Shemetov, Sberbank is preparing to build a trading infrastructure. He said: “We are building a full trading setup so that we can play on the book ourselves, both to open our own positions and to give customers the ability to buy and sell.” At the same time, he called cryptocurrencies a very risky product with high volatility, so Sberbank will not provide this service to a mass audience. Conducting trade operations with cryptocurrency will be available only to legal entities.
VTB Bank is a Russian universal commercial bank with state participation. It is the second-largest bank in the country and the biggest in terms of authorised capital.
The head of VTB, Andrey Kostin, has previously called Bitcoin “fake money” without a “big future”. He also added that the traditional financial system would be in danger if the unregulated cryptocurrency market becomes dominant. He believes that cryptocurrency will never come out of its “narrow niche” of use and that miners are more like counterfeiters.
VTB Bank does not allow customers to exchange currency for crypto directly. VTB is suspicious of Bitcoin, but modern technologies related to cryptocurrency are of great interest, particularly blockchain.
Kostin has however said that tough measures to regulate the cryptocurrency market would reduce the speculative effect of digital currencies.
“Any ad hoc area in which a client’s money is handled creates a very big risk for both parties. But after the emergence of clear principles of interaction between the parties in the process of currency movement on accounts with cryptocurrency, it will be possible to work.”
It seems that large Russian banks are preparing their own developments in the field of crypto-economics for domestic users – if not now, then certainly in the near future. All over the world, technologies of this calibre are characterised by extreme development. In Russia, the government is trying to make the most of this, but there is still a bureaucratic struggle. Russian businesses are ready for innovative technologies and progress.
Russia has historically had a tendency to completely ban everything new so the government can get to grips with the technology before making an objective decision. In other words, despite the current gloomy atmosphere, a ray of hope is still visible at the end of the tunnel.