Rosbank Leads the Way: Russia’s Major Bank Initiates Bitcoin and Crypto Cross Border Payments, Embracing Regulatory Compliance

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• Rosbank, a leading Russian bank, is introducing a facility to allow importers to use cryptocurrency for cross-border transactions, despite the Bank of Russia’s reservations.
• The new process involves the use of a startup crypto firm, B-crypto, to purchase the cryptocurrency outside of Russia, claiming regulatory compliance in doing so.

In a ground-breaking move for the Russian banking sector, Rosbank, one of the country’s major banks, is launching a facility that will enable importers to complete transactions using cryptocurrency. This comes despite the Bank of Russia’s position against such use of crypto within the country. To maintain regulatory compliance, Rosbank is utilizing the services of startup firm B-crypto to procure the cryptocurrency outside Russia’s borders and transfer it to the foreign supplier.

Amendments to digital asset regulations are presently underway in Russia, with an emphasis on enabling their usage in cross-border payments. However, these adjustments pertain specifically to Digital Financial Assets (DFA), tokenized real-world assets like metals or trade credits, as opposed to cryptocurrencies.

Interestingly, Rosbank’s current initiative links to the ongoing legislation changes. Once a subsidiary of Societe Generale, Rosbank was divested after Russia’s incursion into Ukraine. Now, it’s under the ownership of an entity led by Vladimir Potanin.

Potanin also manages Nornickel, a metals company that initiated Atomyze, the inaugural Russian enterprise to tokenize metal assets as a DFA. Established in 2020, Atomyze has been honing the concept of metal tokenization, poised to deploy these metal tokens for cross-border payments once the legislation passes. It’s plausible that Rosbank’s experience with crypto might overlap with tokenized metal assets, potentially positioning the bank at an advantage.

As reported by Vedomusti, the protocol involves the foreign goods supplier specifying in their contract their acceptance of crypto payments and providing a crypto wallet. Upon contract finalization, an agreement is signed between the importer and B-crypto, following which the customer deposits money at Rosbank and requests a crypto purchase.

Funds are transferred from the bank to B-crypto, which then acquires the crypto from an overseas crypto exchange situated in a crypto-friendly nation and transfers it to the supplier. The importer must complete Know Your Customer (KYC) procedures with both the bank and B-crypto, which remains in a pilot phase, having been established only in late 2022.

Simultaneously, Russia’s draft legislation for the Central Bank Digital Currency (CBDC) has recently been revised to permit foreign access, viewing the CBDC as another avenue to bypass sanctions.