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28 January 2021
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Blockchain

Russian Bank VTB Introduces Blockchain Based Bank Guarantees.

  • VTB bank in Russia declares the use of the central bank-backed blockchain system.
  • The first guarantee provided to the country‘s biggest cellular network provider.

Russia’s second-largest bank has declared its use of a central bank-backed blockchain system to issue bank guarantees.

Following an official announcement on December 16th, their first guarantee was provided to MTS, the country’s largest cellular network company.

Using an Ethereum-based blockchain which is backed by the Russian central bank called Masterchain, MTS was issued a guarantee for payment fulfillment obligations worth 392 million Rubles ($5 million).

VTB and MTS completed the transaction in real-time, with the Russian bank issuing a digital guarantee that was signed with a reinforced qualified signature. MTS then accepted the document and sent a notification back to the bank in correspondence.

The integration of the new system allows the bank to speed up the process of issuing guarantees and reduces paperwork significantly, according to the deputy president and chairman of the VTB management board Vadim Kulik. He also said that the use of blockchain eliminates the risk of fraud which is widely associated with bank guarantees.

Director of corporate finance at MTS, Alexander Smirnov, explained that using the blockchain-based system will reduce their operational costs greatly and allow for improved competition between any participating banks.

Masterchain was first introduced in 2016 and is the first blockchain platform that has been certified in Russia. It was developed by the Russian Fintech Association with collaborations from the Bank of Russia as well as some major financial players such as Alfa Bank, Tinkoff Bank, and Sberbank. The Ethereum-based blockchain uses local cryptographic data protection methods to ensure it’s security.

VTB hasn’t been the only Russian bank to venture into the world of blockchain recently, with Alfa Bank announcing a blockchain-enabled project to help automate services for freelancers as well as Sberbank joining a blockchain platform for commodity trade finance through its Swiss subordinate.

For more news on this and other crypto updates, keep it with CryptoDaily!

© 2020 CryptoDaily All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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