Blockchain adoption is the right direction for Russia to solve its current settlement problem, according to an executive at Russia’s largest bank, Sberbank.
Blockchain technology has matured over the past few years to provide new capabilities that could allow Russia to create a more efficient payment system, said Sberbank first vice chairman Alexander Vedyakhin.
On March 14, Vedyakhin attended a meeting of the Russian Federation Council on the budget and financial market committee, highlighting the future of blockchain in Russia, local news agency Interfax reported.
According to Vedyakhin, distributed ledger technology (DLT) is a good foundation for new payment systems due to its decentralized nature and privacy-enabling features. He stated:
“Because of the distributed ledger, there is no single point of decision-making, no center, no switch that can be turned off; everyone has a record of everything, and there is a special protocol that allows you to do this secretly.
Vedyakhin added that Sberbank is currently actively exploring the implementation of blockchain technology for payments. “We believe that Sberbank and other colleagues from the central bank will find this solution,” he said, expressing his belief that blockchain will become more relevant in 2023. Sberbank executives said:
“The next generation of payment systems will be on the blockchain.”
In his speech, Vedyakhin also noted that blockchain has developed rapidly over the past few years, with developers able to find solutions to problems like limited scalability and limited privacy. This blockchain problem has been solved so far, he added.
According to Mark Smargon, CEO of the Fuse Network public ledger project, there are no technical reasons preventing Russia from creating its own blockchain-based system.
“The main adoption by mainstream businesses and consumers is right around thanks to new developments in scale and privacy technology, especially in EVM-compatible systems, which have become the standard for experimentation,” said Smargon in a statement to Cointelegraph.
related: Russian crypto advocates urge Putin to end regulatory hostility
He noted that fully online real-time technology for cross-border payment settlement is “just a matter of time,” with the technology maturing significantly over the past few years. At the same time, Smargon asked whether blockchain could enable the economy to bypass international sanctions, stating:
“It needs to be clarified when this technology will be widely adopted and whether it will allow users to bypass international sanctions. Blockchain enables better transparency, and disintermediation is not the only solution for illegal activities.
The news comes amid Sberbank’s completion of a decentralized financial platform based on Ethereum, which is planned to be tested in May 2023. Russia’s largest bank has also been working on an international settlement platform that will be an alternative to SWIFT. According to the CEO of Sberbank German Gref, the company plans to complete the configuration in 2023.