Russia’s largest bank has been locked out of global financial markets – and has now launched a cryptocurrency
A person walks past the Sberbank headquarters in downtown MoscowPavel Golovkin/`
Russia’s largest bank received permission to issue a digital currency just weeks after invading Ukraine.
Sberbank launched Sbercoin when Western sanctions blocked Russia’s access to the global financial system.
The US and its allies are concerned about Russia’s use of crypto to circumvent sanctions.
Since Russia launched its war against Ukraine, a series of restrictions have been placed on the country, cutting it off from most of its foreign exchange reserves and the global financial system.
In the midst of all this, Russia’s largest bank has launched a cryptocurrency.
In early March, just days after the invasion began, trading in Sberbank shares was halted in London after they plummeted 95%. The lender was ordered to shut down its European business as Western sanctions disrupted the Russian economy.
But just two weeks later, on March 17, the Central Bank of Russia granted Sberbank a license to issue its own cryptocurrency, according to media reports. This led to the launch of Sbercoin on the same day.
Russia is understood to be struggling to meet dollar-denominated debt obligations and has announced that it will demand payment for its energy in rubles.
Against this background, there has been speculation that the Sbercoin could become a condoned way to exchange rubles for other currencies and bypass restrictions.
However, according to Asheesh Birla, general manager of blockchain-based payment service provider RippleNet, the feasibility is debatable.
“It’s going to be super problematic for them to get a lot of traction here because they also need a fluid exchange that’s going to take the Russian ruble,” he told Insider.
The sanctions caused the ruble to plummet and prompted Moscow to impose capital controls. Russians struggled to protect their foreign currency assets and a black market in dollars and euros emerged.
Birla pointed out that while Sberbank can launch a cryptocurrency, it may not help moving cash in and out of the country.
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Stablecoins like Tether and USDC are popular — among the top five cryptocurrencies by market value, according to CoinMarketCap data — because exchanges use them to trade other cryptocurrencies.
“I’m not sure that getting liquidity to and from Russia will be very helpful,” Birla said of Sbercoin.
“It’s like taking your own bank account and entering it in a ledger. It’s not all that useful unless you can start trading it for other things. And so far I’ve seen the data that it’s not very liquid,” he added.
Sbercoin started trading at $0.0003617 on March 17, and its trading volume in the 24-hours after launch was just under $948,000, according to CoinMarketCap data. The coin, which trades primarily on Pancakeswap, has since fallen around 90% to $0.00002211, and its 24-hour trading volume stood at $1,248 as of 12:30 p.m. ET on Friday.
The potential for a cryptocurrency issued by Sberbank was first floated in 2020, when the lender began experimenting with blockchain technology. Its CEO Herman Gref said at the time the bank could consider issuing Sbercoin in 2021, a local news site reported.
In September, Sberbank’s deputy chairman said it hopes to register its blockchain plans with the Central Bank of Russia. But it hasn’t spoken out about its crypto plans since then and hasn’t responded to Insider’s requests for comment.
The US and its allies are concerned about using cryptocurrency to circumvent financial sanctions against Russia, although there is little evidence of this.
In fact, ruble-to-crypto trading volume has plummeted since the invasion began, when it surged over 900% in five days to over $70 million — its highest level since May 2021 — according to Chainalysis research.
Chainalysis found in its 2021 research that Russia ranks high in crypto adoption around the world. So, high volumes of ruble-denominated crypto trades do not necessarily reflect attempts to circumvent sanctions.
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