Russia’s Sber Bank Aims for Blockchain Integration With Ethereum and Metamask

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Russia’s largest lender is moving into DeFi and Web3 by integrating its blockchain platform with the Ethereum blockchain.

Russia’s largest bank Sber — formerly known as Sberbank — continues developing its blockchain platform by integrating it with the Ethereum blockchain.

On Nov. 30, Sber officially announced new opportunities for its proprietary blockchain platform, including compatibility with smart contracts and applications on the Ethereum network. This would allow developers to move smart contracts and entire projects between Sber’s blockchain and public blockchain networks, the bank said.

Sber’s latest additions also bring an integration with major software cryptocurrency wallet MetaMask, which is used to interact with the Ethereum blockchain. The integration allows users to make operations with tokens and smart contracts placed on Sber’s blockchain platform, the announcement notes.

“Sber Blockchain Lab works closely with external developers and partner companies, and I am glad that our community will be able to run DeFi applications on Sber's infrastructure,” head of blockchain lab Alexander Nam said. He noted that the newly integrated features will help Sber to unite developers, corporations and financial institutions to explore practical business applications of blockchain, Web3 and decentralized finance.

As previously reported, Sberbank has been actively developing blockchain products in recent years, filing an application with the Bank of Russia to launch a blockchain platform for its “Sbercoin” stablecoin in early 2021. After receiving the central bank’s approval in spring 2022, Sber finally announced its first digital currency deal in June. Sber’s majority shareholder is the government of Russia, holding 50% + 1 share.

Sber’s announcement came shortly after Russian President Vladimir Putin called for an open blockchain-based settlement network. He criticized the monopoly in global financial payment systems, expressing confidence that digital currencies-based technology will drive independence from banks. At the same time, Putin’s government does not allow its citizens to use crypto as payment, putting a blanket ban on payments with Bitcoin (BTC) in early 2020.

In late November, Russian lawmakers also discussed potential legal amendments in order for the government to launch a national crypto exchange. This effort is reportedly supported both by the Ministry of Finance and the Bank of Russia, which are known for having a lot of disagreement when it comes to regulating the local crypto market.

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Bank of Russia

Sber was initially planning to launch its blockchain-enabled digital asset platform and the Sbercoin stablecoin by spring 2021.

Russian banking giant Sber — formerly known as Sberbank — is preparing to soon complete its first digital currency deal involving the bank’s proprietary digital asset platform.

The bank will conduct its first transaction involving digital financial assets (DFA) on its digital asset issuance platform by mid-July.

Anatoly Popov, deputy chairman of Sber’s executive board, disclosed Sber’s plans to complete such a deal in an interview with the state-backed news agency TASS on June 15.

Popov claimed that Sber finally received registration from the country's central bank — the Bank of Russia — in spring 2022, following a series of registration delays. Sber has been struggling to register its digital asset issuance platform, initially expected to launch alongside its Sbercoin stablecoin by spring 2021.

While the latest news doesn’t directly mention the application of blockchain on Sber’s platform, Popov noted that the bank is committed to exploring the technology, stating:

“We are looking closely at the development of new technologies like distributed ledger technology. We are studying how blockchain technologies are developing. Our platform has already passed acceptance tests, and the first transaction will take place within a month.”

The news came in conjunction with VTB — Russia’s second-largest bank — also preparing to test the purchase of DFAs in exchange for Russia’s central bank digital currency, the digital ruble, in September 2022. VTB’s board member Svyatoslav Ostrovsky reportedly announced plans to launch a new platform to buy digital rubles at the Saint Petersburg International Economic Forum on June 15.

The Russian parliament passed a new bill in the first reading to prohibit the use of DFAs as payment for goods and services on June 14.

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Central Bank of Russia

The entity had previously called for the government to ban cryptocurrencies in Russia.

Less than two weeks after the Central Bank of Russia, or CBR, reiterated its position proposing to ban the issuance, mining and circulation of cryptocurrencies in Russia, it appears to have reevaluated its policy. In a press release published on Thursday, the CBR added the country’s biggest lender, Sberbank, to its register of information system operators for digital financial assets. As reported by local news outlet Tass, the CBR stated:

“Inclusion in the registry allows companies to issue digital financial assets and exchange them between users within their platforms.”

Sberbank’s blockchain platform is based on a distributed ledger technology, which can, theoretically, protect against information tampering. Legal entities on Sberbank will soon be able to issue digital financial statements certifying monetary claims, acquire digital assets allocated in Sberbank’s system and conduct crypto transactions. Sergey Popov, director of Sberbank’s transactional business division, gave the following remarks regarding the development:

“While we are still at the beginning of working with digital assets, we realize that further development is necessary to adapt to the existing regulatory framework. We are ready to work closely with the regulator and executive authorities regarding this direction.”

As a state-owned bank, Sberbank has been targeted by sanctions, such as those imposed by the United States Treasury, since the start of the Russia–Ukraine War. Earlier this month, Sberbank exited almost all European markets due to sanctions imposed by the European Union. Simultaneously, its foreign depository shares have plummeted by over 99% on the London Stock Exchange, with trading halted and its last quoted price being $0.05 apiece.

The devastating sanctions imposed on Sberbank alongside the CBR’s apparent policy reversal on crypto have led to speculation that digital currencies may represent a “lifeline” for the troubled bank. However, experts don’t believe that sanctioned financial institutions can use crypto to evade sanctions.

Sberbank

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