based in Russia Launch of Rosbank a new service on Friday that allows cross-border settlements using cryptocurrencies. Rosbank, the first Russian bank to launch such a service, is one of the country's banks in the West's sanctions package to limit Moscow's war efforts in Ukraine.
Rosbank turns to a Russian fintech company to enable cross-border crypto payments
Rosbank, one of the largest banks based in Russia, launched a cryptocurrency cross border settlement solution, according to a report in the local newspaper Vedomosti. The bank is the first Russian bank to implement such a service.
The Rosbank representative told Vedomosti that the bank is already conducting pilot transactions with some private and corporate clients. The technical aspect of the agreements is handled by B-crypto, a Russian fintech company that provides international digital currency payment services.
The solution allows Rosbank customers to pay for imported goods or other services using cryptocurrencies. However, before using the new feature, customers must go through a Know Your Customer (KYC) process at Rosbank and B-crypto.
If a Russian company wishes to purchase imported goods or services using cryptocurrencies, it must previously indicate the possibility of such payments and offer its crypto wallet address in the contract with the provider. Meanwhile, a foreign provider issues an invoice to the Russian client, which must include a description of the goods and services and an indication of the amount in cryptocurrency and the address of the wallet.
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Rosbank's new service could lead to more crypto sanctions against Russia
The move comes several months after the US government imposed severe sanctions against Rosbank and other major banks in Russia to limit Moscow's efforts to finance its invasion of Ukraine. The US Treasury Department's Office of Foreign Assets Control (OFAC) announced the restrictions, describing Rosbank as a "systemically important lending institution" in Russia.
Eduard Davydov, senior partner at law firm Emet, said Rosbank's recently launched cross-border solution could draw criticism from the West, which could see the bank's move as a way to circumvent sanctions. Furthermore, many countries are already taking steps to include crypto transactions in their sanctions packages against Russia.
The US government, led by the Biden administration, hinted at plans to sanction Russia's crypto market right after its 2022 invasion of Ukraine. Quick actions by the West against Russia were followed by similar moves by private crypto companies like Crypto. com and Blockchain.com.
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Do you think the US and EU will take action to restrict Rosbank's new cross-border solution? Let us know in the comments below.
About the Author
Tim Fries is the co-founder of The Tokenist. He has a B.Sc. in Mechanical Engineering from the University of Michigan and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate in RW Baird's US Private Equity investment team and is also a co-founder of Protective Technologies Capital, an investment firm specializing in detection, protection and control solutions.
