Rosbank, one of Russia’s largest banks, has launched a groundbreaking service that allows cross-border settlements using cryptocurrencies. As the first Russian bank to offer such a solution, Rosbank aims to facilitate international transactions while navigating the Western sanctions imposed on the institution due to the ongoing conflict in Ukraine.
Partnership with Russian Fintech Firm for Crypto Payments
Rosbank has collaborated with B-crypto, a Russian fintech firm specializing in international digital currency payment services, to handle the technical aspects of the cross-border settlements. Pilot transactions are already being conducted by the bank with select private and corporate clients.
Usage and KYC Process
Through Rosbank’s new service, clients can utilize cryptocurrencies to pay for imported goods and services. However, prior to utilizing this feature, customers must undergo a Know Your Customer (KYC) process conducted by both Rosbank and B-crypto. This process ensures compliance with regulatory requirements and enhances security.
Previously, if a Russian company wanted to make payments in cryptocurrency for imported goods or services, they had to include the possibility of such payments and their crypto wallet address in the contract with the supplier. Subsequently, the foreign supplier would issue an invoice, indicating the description of goods and services, the amount in cryptocurrency, and the wallet address of the Russian client.
The launch of Rosbank’s new service may attract criticism from Western nations, which could view it as an attempt to bypass existing sanctions. Several countries are already incorporating crypto transactions into their sanctions packages against Russia. Following the US government’s imposition of significant sanctions on Rosbank and other major Russian banks, Rosbank was categorized as a “systemically important credit institution” by the Office of Foreign Assets Control (OFAC) within the US Treasury Department.
Concerns and Future Developments
Experts, such as Eduard Davydov from Emet Law firm, warn that Rosbank’s cross-border solution may face scrutiny from Western nations, potentially resulting in further sanctions. The move comes in the wake of global concerns regarding Russia’s invasion of Ukraine. The Biden administration has hinted at plans to impose sanctions on Russia’s crypto market, and private crypto firms like Crypto.com and Blockchain.com have also taken actions aligned with the Western stance against Russia.
Rosbank’s introduction of a cryptocurrency cross-border settlement solution signifies a significant development in the Russian banking sector. Despite operating under Western sanctions, the bank aims to facilitate international transactions for its clients. However, the move is not without its challenges, as it may lead to further scrutiny and potential repercussions. The evolution of crypto-related sanctions and the reactions of various countries will undoubtedly shape the future landscape of cross-border cryptocurrency transactions involving Russian entities.