Russia’s second largest bank tests bank guarantee blockchain system. VTB, Russia’s second largest bank after Sberbank, has piloted a new blockchain-based system to issue bank guarantees.
According to an official announcement on Dec. 16, VTB provided a blockchain-enabled bank guarantee to MTS, the country’s largest mobile cellular network provider. The bank issued a guarantee to MTS for the fulfilment of payment obligations worth 392 million rubes, or $5 million. The commercial activity was carried out by Masterchain—an Ethereum-based blockchain prototype backed by the Russian central bank.
The parties completed the transaction in real time with VTB releasing a digital guarantee signed with a reinforced qualified signature. MTS then accepted the document, sending a corresponding notification to the bank.
Vadim Kulik, Deputy President and Chairman of the VTB management board, said that the new integration helped the bank to accelerate the process of issuing guarantees and dramatically reduced paperwork. He noted that the implementation of blockchain also removes the risk of fraud associated with bank guarantees.
Alexander Smirnov, director of corporate finance at MTS, emphasized that the Masterchain-based bank guarantees system will also reduce operational costs and increase competition among participating banks.
Masterchain is known as the first blockchain platform certified in Russia, using local cryptographic data protection methods. The platform was established by the Russian Fintech Association with the Bank of Russia and major financial players like Sberbank, Alfa Bank, Tinkoff Bank, and Qiwi.