VTB bank of Russia has integrated a prototype feature that will allow the bank’s customers to transact using digital rubles. The CBDC issued by Russia’s central bank is expected to be fully launched in 2024.
VTB, the Russian Federation’s largest bank, has developed a feature to integrate the digital ruble into its banking app. The feature will allow the bank’s institutional clients to open accounts and make cash transfers using the central bank digital currency (CBDC). VTB will release the prototype for all customers in 2023.
“At this stage, we are testing the opening of wallets for legal entities, we have already managed to register a legal entity, set up a wallet for it and generate a static QR code to pay for purchase,” said Vadim Kulik, Deputy Chairman of VTB’s Executive Board.
In 2024, the bank has plans to launch an exchange on the app that will allow users to convert the CBDC into regular electronic currency. At the 2022 Finopolis – an event to introduce innovative new technologies in fintech – VTB showcased a feature that enables users to purchase cryptocurrencies via an exchange regulated under Russian law. This will be available to customers on the VTB app starting next year.
Bank of Russia first presented a concept for the digital ruble in October 2020. The central bank finalized a prototype platform for the CBDC in December 2021 and initiated the pilot phase for a regulatory sandbox in January 2022. More than a dozen commercial banks and other financial institutions have joined Russia’s CBDC program which is expected to be fully operational by 2024. The country’s monetary authority will test digital ruble for retail transactions in April 2023.
This comes during a time when the west has imposed strict financial sanctions on the resource-rich nation for its invasion of Ukraine. In February the country was kicked out of the SWIFT network, a global financial messaging network that allows financial institutions to conduct cross-border transactions. In response, Russia’s finance ministry and central bank permitted local banks and companies to use stablecoins for international settlements. In September, Moscow Exchange (MOEX) – Russia’s largest market for equities, bonds, and derivatives, announced that it will be releasing investment products based on digital financial assets (DFA). The exchange is reportedly working with digital asset providers to release the financial instruments by the end of the year. Russia’s parliamentary committee for financial markets says the only viable solution to legalizing cryptocurrencies in the country will be by establishing a crypto trading platform at the MOEX.
Last month, the European Union imposed a new set of sanctions on Russia by putting a blanket ban on all crypto services offered to wallets registered in the country. Earlier the EU had ordered crypto companies operating in the bloc to only offer their services to Russian wallets holding digital assets worth below $10,000.
The digital ruble will be the third form of Russian currency after cash and online money. The central bank-issued digital currency is expected to have all the properties of a ruble in order to be able to facilitate both online and offline cash payments.