Two of Russia’s largest banks are piloting cryptocurrency portfolios for their private clients, the Kommersant newspaper reported Friday.

Under the watch of the Bank of Russia, Sberbank and Alfa Bank will offer their clients shares in a special fund that will be trading the six most popular cryptocurrencies on major exchanges, including Kraken and Bitstamp, according to the report.


Sberbank, the main state-owned bank responsible for processing government employee paychecks, and Alfa Bank, the largest private bank in the nation, plan to enter crypto trading with the help of the AddCapital investment fund, the National Settlement Depository and Group IB.

Sberbank Private Banking deputy chair Ana Ivanchuk said:

“We’d like to offer our clients an absolutely transparent way to invest in digital assets with a full compliance with regulations that will let them invest in the product they are interested in Russia.”

“Our goal is to speed-up the recognition of the digital assets as legitimate financial assets as soon as possible,” said Anton Rakhmanov, manager of Alfa Bank’s private banking branch.

AddCapital, the investment fund which participated in the recent pre-sale of Telegram tokens, is said to be in charge of the technical solution for the project. CEO Alexey Prokofyev said the investment process will see investors purchase a share of the fund.

The portfolio will include the six most popular cryptocurrencies, including bitcoin, bitcoin cash, ethereum and litecoin. The combination of coins will be revised four times a year, and their proportions will be balanced by a trading algorithm.

“The shares are liquid and a client can send them for fiat currencies any time,” Prokofyev said.

The National Settlement Depository, which is a part of the Moscow Exchange Group, will act as the custodian. While testing the portfolio process will take roughly 45 days, the specific dates have not been disclosed.

Sberbank declined to comment when reached.

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The Supreme Court of Russia has directed a court in the city of St. Petersburg to consider an appeal against a blocked cryptocurrency information website.

According to Russian legal information site RAPSI, the Vyborgsky District Court of St. Petersburg blocked in 2016, claiming that cryptocurrencies are “a means of virtual payment and accumulation,” and therefore, the provision of related information is illegal because it undermines the country’s sole legal currency – the ruble.


The court did not invite the defendants to the initial trial, and they were unaware of the court’s decision to block the site until access was cut off, Russian crypto publication Anycoin said. The original appeal period closed by that point.

Bitcoininfo reportedly attempted to appeal the ruling despite missing the window, but the court declined to review it. Anycoin reported last month that the Supreme Court would review the case after subsequent reviews, which it has now passed onto the St. Petersburg City Court as of Friday.

According to RIA Novosti, the same St. Petersburg court reviewed a similar appeal in February and overturned a decision to block 40 bitcoin-related sites.

The Russian government has largely expressed opposition to informational sites about cryptocurrencies. Last year its central bank said it would back efforts to block access to external websites selling cryptocurrencies in the country, citing risks to investors as its justification, as previously reported.

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The Central Bank of Russia is considering using its Masterchain blockchain software to transmit SWIFT financial messaging across the Eurasian Economic Union (EAEU), an official said on Tuesday.

Russia’s FinTech Association, formed under the oversight of the central bank, successfully carried out a trial of the ethereum-based software in 2016 and completed a working version of it in 2017.


“An active discussion is underway, and we are looking into several quality technologies, including Masterchain,” said Olga Skorobogatova, the Central Bank of Russia’s first deputy chairman, according to Russian news agency Tass.

Skorobogatova explained that Masterchain is under consideration within the context of a broader examination of how the blockchain could create a “supranational infrastructure” for payments within the EAEU, allowing member states to “sidestep” existing payment systems.

The Bank intends to operate its platform of choice within Russia first, rolling it out later as an EAEU-wide system.

As for when further deliberation over Masterchain might take place, Skorobogatova remarked, “I think that we will discuss options regarding this project as early as this year.”

The Central Bank of Russia has been actively involved in the blockchain and cryptocurrency space, and has taken a particularly strict approach to the latter. In 2017, it both issued warnings regarding the risks associated with crypto investments and backed efforts to block websites selling cryptocurrencies in the country.

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Sberbank, one of the largest banks in Russia, has announced a blockchain laboratory to develop and test blockchain-based solutions.

The new lab aims to generate product prototypes, perform pilot tests and deploy blockchain-based business solutions for Sberbank Group, a press release says.


According to Igor Bulantsev, Sberbank’s senior vice president, blockchain can help in “reshaping” the financial business market, as well as the bank’s activities and services.

Bulantsev said:

“It is important to note that blockchain helps market participants cooperate more efficiently. Hence, Sberbank is making a contribution to the future of the banking industry and our country by launching the blockchain laboratory.”

The project will work on developing advanced technologies in conjunction with the bank’s other laboratories, and is also planning to build collaborations with startups, and via other alliances.

Sberbank’s blockchain lab will appoint blockchain specialists with experience in building and implementing blockchain ideas to existing products as well as creating new approaches to business activities, the release adds.

The launch comes a month after the CEO of Sberbank, Herman Gref, stated that the wider-scale implementation of blockchain in Russia could take as long as a decade. He noted at the time, Russia is “experimenting a lot” on blockchain and added that the bank will introduce some products on a “large scale” this year.

In February of last year, Gref predicted that the use of distributed ledger technology by banks and other incumbents could be just 2–2.5 years away.

Sberbank has launched number of initiatives in the blockchain ecosystem including its recent entrance into the Enterprise Ethereum Alliance – an enterprise-focused consortium. Some of the bank’s blockchain-based pilot projects include joint solutions with Severstal and Federal Antimonopoly Services, among others.

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The Russian government is to begin testing a blockchain-based land registry system early next year.

According to a draft resolution published by the Ministry of Economic Development, the Federal Service for State Registration, Cadastre and Cartography (Rosreetr), the Federal Tax Service and the Government of Moscow will assess the trial through July 1, 2018. The ministry will submit and release a final report on the trial by Sept. 1.


According to the translated document:

“The use of blockchain will be aimed at increasing the availability of information on the property registry, guarantees of protection of property rights, as well as the level of citizens’ trust in the sphere of turnover of real estate.”

The pilot project comes seven months after Prime Minister Dmitry Medvedev asked two government ministries to begin looking into possible public-sector applications of blockchain technology.

He said at the time: “We need to analyze in general, as far as it is applicable in our governance system – and public administration, and in the economy … I instructed the relevant ministries – the Ministry of Communications and the Ministry of Economic Development – to consider the possibility of using these technologies in preparing the program ‘Digital Economy’.”

In a press release, Economic Development Minister Maxim Oreshkin said the high cost of operating Rosreetr made it a top choice for applying new technologies like blockchain.

Russia’s announcement follows a plethora of other national and regional governments announcing their own land-registration projects. Sweden, Ukraine, and the United Kingdom have all launched trials, along with two Brazilian municipalities and the Indian state of Andhra Pradesh.

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The Enterprise Ethereum Alliance just welcomed its first Russian bank.

After signing up more than 100 businesses to build enterprise distributed ledger technology compatible with the ethereum blockchain, the group has added Sberbank, the nation’s largest bank, to its growing list.


Revealed in interview with CoinDesk, Sberbank framed its addition to the alliance as a new way to capitalize on international markets.

Evgeniy Kravchenko, head of trade finance and correspondent banking at Sberbank, told CoinDesk:

“The next step for our blockchain team will be operations with foreign-based financial institutions and other banks, to do some international transactions, to see how we can increase the transparency and improve the trust between banks and corporate clients.”

Already, Sberbank reported that it has completed at least two blockchain proofs-of-concept – one for a “smart” letter of credit and another for a letter of guarantee – working in cooperation with regulators, the minister of the economy, other banks and Russia’s International Chamber of Commerce.

Kravchenko, however, said that its entrance into the EEA is part of a bid to go beyond the initial use cases its already tested.

“We’ll be working with other banks on projects in other business areas, apart from trade finance: payments, lending, retail, everything that’s possible,” he added.

Critical mass

But Kravchenko was keen not to suggest that he’s limiting the scope of Sberbank’s work just alliance members.

Instead, he says the bank is interested in continuing to work with Russian banks who aren’t members of the EEA on new and existing projects.

“The more players on the network, the better the network will be,” said Kravchenko.

But Kravchenko is no blockchain maximalist. In fact, Kravchenko himself imagines a world where blockchain might not be exactly as necessary as some supporters think.

Using the Sibos conference as an example, he said it remains unknown if the technology could, say, replace or replicate the services offered by Swift, the interbank messaging service that also serves as conference host.

He concluded:

“I think blockchain may influience all the parties who are represented here, because all the banks are here, Swift is here. But the main message from my side is we need to do it together and jointly with other players.”

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The first deputy governor of Russia’s central bank, Sergei Shvetsov, has said that his institution will support efforts to block access to external websites selling cryptocurrencies in the country.

Speaking at a conference on Tuesday, Reuters reports that Shvetsov cited the “unreasonably high risks” involved in cryptocurrency investment as a reason for the proposed measure, adding: “We cannot give direct and easy access to such dubious instruments for retail (investors).”


As such, the Bank of Russia will be working alongside the judiciary to ensure the closure of websites offering these services – a crackdown that he indicated will extend to “all cryptocurrency derivatives.”

Russian news agency TASS quotes Shvetsov as stating:

“We consider all cryptocurrency derivatives to be a negative development on the Russian market and do not consider it possible to support it, and will even assume measures to restrict potential operations with such instruments made by the regulated part of the Russian market. Meanwhile, we assume efforts aimed at closing external websites that allow Russian citizens to acquire such assets together with the General Prosecutor’s Office.”

Shvetsov further added that, with bitcoin being an asset that can generate high returns very quickly, it shows signs of being a pyramid scheme.

The move to block access to cryptocurrency trading websites follows a number of warnings from Russian authorities in the past few months.

Alexey Moiseev, the country’s deputy finance minister, said in September that he expects upcoming legislation to feature a flat-out ban on payments made in cryptocurrency. Earlier the same month, deputy governor of the Bank of Russia Dmitry Skobelkin told Bloomberg: “China doesn’t recognize cryptocurrency as payment and forbids ICOs. Our views are absolutely similar.”

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The National Settlement Depository (NSD), the central depository for Russia’s largest securities exchange group, has announced it is testing a new commercial bond trading platform built on top of the Hyperledger blockchain consortium’s Fabric software.

Already, Raiffeisenbank Russia has used the prototype platform to purchase $10 million-worth of bonds of MegaFon, the country’s second-largest mobile phone network. The bonds have a redemption date of December 22 and, despite the short-lived nature of the test, the NSD concluded that the technology could help keep the process “simple and transparent.”


“The ultimate goal [of the] NSD is to build blockchain infrastructure for any innovative financial product to operate on. Once the infrastructure is created, [the] technology holds potential to deliver a large variety of financial products and services operated by smart contracts,” Eddie Astanin, chairman of the NSD’s executive board, said in a statement.

Notably, the central depository operator has made the code behind the project open source on GitHub. California-based software firm Altoros also took part in developing the prototype platform.

The project adds to the slate of initiatives already underway at the NSD, including a cryptocurrency wallet as part of a broader suite of services.

“Our goal is to create a secure and user-friendly accounting infrastructure for digital assets,” Astanin said in a statement at the time.

The Linux Foundation-led Hyperledger consortium takes a focus on building blockchains for enterprises, and has so far signed up more than 130 members. Notably, it issued the Fabric software’s official release candidate in June, framing it as an important step towards a finalized version 1.0 launch.

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Russian Deputy Prime Minister Arkady Dvorkovich has said he believes blockchain technology could be applied “broadly” to state administration in the country.

Making his comments at an international science and technology forum in Kyoto, Japan, Dvorkovich stated:


“I don’t have the slightest doubt blockchain technologies will find broad use in state administration in the short term.”

As reported by Russia’s state-owned news service TASS, the politician also spelled out that the technology will require a legal framework in which to operate, adding that authorities are looking to recent regulatory developments in Japan as an example.

“All of these novelties require legislative foundation for further development, and we’re studying Japan’s experience with much interest now,” he said.

Japan has taken a more progressive approach toward blockchain and cryptocurrencies compared to other nations. The country passed legislation earlier this year which recognized bitcoin as a form of legal tender, and last week, 11 cryptocurrency exchanges were granted operating licenses.

Dvorkovich continued later emphasized that the actual process of integrating blockchain, as well as other new technologies, could involve some additional hurdles.

“The greatest challenge for the governments is to develop the regulations that would avert the emergence of a yet another fiscal bubble and would pave the road for new technological and scientific discoveries,” he said.

Development of these regulations are likely to be completed by 2019, TASS has previously indicated.

The deputy prime minister’s statements come as part of a wider effort within Russia to implement blockchain into a variety of services. In a speech in March, Prime Minister Dmitry Medvedev ordered two government ministries and a state-owned development bank to research potential applications of the tech. A week prior, he stated that blockchain could “decisively change our lives.”

A cryptocurrency law is currently being developed in Russia, though it is likely take a more restrictive tone than Japan’s recent legislation. Alexey Moiseev, Russia’s deputy finance minister, has said he expects the legislation to impose new restrictions on the kinds of permissible transactions.

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