- Rosbank is reportedly launching a cross-border payment system using cryptocurrencies. The KYC verification process will be required for clients using the new service.
- The system could help Rosbank bypass sanctions.
Russian financial heavyweight, Rosbank, is stirring the global banking scene. As per recent reports, this renowned bank is on the verge of launching a novel cross-border payment system based on digital assets, colloquially known as cryptocurrencies. Originally published by the Russian media outlet Vedomosti, this revelation might significantly alter how financial institutions perceive cryptocurrencies.
Moreover, it’s understood that Rosbank has already initiated test transactions with a handful of private and corporate clients using this system. While this move hints at an exciting shift, it remains uncertain which cryptocurrencies will be supported in the bank’s new payment protocol.
Strategic Partnership with B-crypto
Rosbank is collaborating with B-crypto, a recognized Russian fintech company, to roll out this innovative payment platform successfully. B-crypto is primarily responsible for the technical implementation of the platform, ensuring smooth operations.
Before customers can use this service, however, they must undergo a Know Your Customer (KYC) verification process with both Rosbank and B-crypto. This procedure is crucial for the bank to maintain stringent security measures against potential illicit activities like fraud or money laundering.
Big Banks and Crypto – An Unusual Pairing
In his comments about the development, Alexey Voylukov, Vice President of the Association of Banks of Russia, underlined that while smaller banks have started offering crypto-based cross-border payments, larger institutions have generally remained hesitant. Therefore, Rosbank’s latest venture might position it as a trailblazer among larger-scale banking institutions.
However, Vladimir Chistyukhin, First Deputy Chairman of the Bank of Russia, urged caution. He noted that cryptocurrency-based cross-border payments would unlikely replace traditional international payment methods anytime soon.
Sanctions and Cryptocurrency – A Potential Loophole?
Interestingly, these developments follow the US Department of the Treasury’s sanctions against Rosbank due to Russia’s role in the Ukraine conflict. These sanctions, which also target the bank’s owner, Vladimir Potanin, reported as Russia’s wealthiest individual, are intended to restrict Moscow’s financial resources for the conflict.
This has spurred conjecture about Rosbank’s intentions behind launching the new initiative. In a report by RBC Group, Eduard Davydov, a senior partner at Emet Law Firm, postulated that the crypto-based cross-border payment system might enable Rosbank to bypass the sanctions imposed on it.
While it’s premature to interpret the bank’s motives definitively, the unfolding events emphasize the increasing significance of digital assets in global finance. On the one hand, the move could be seen as a potential workaround to international sanctions, thus highlighting the need for further regulation and scrutiny of cryptocurrency usage.
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On the other hand, Rosbank’s new crypto-payment system could lead the way for other banks globally, setting a precedent in finance. It will undoubtedly be a development to keep an eye on.
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