The central financial authority has developed a prototype blockchain messaging system. To test it with leading market players, a consortium is being created to include financial and technology companies.

A number of large banks have already confirmed their participation. As emphasised by Central Bank deputy chief Olga Skorobogatova, it would be less productive for the regulator alone to test the technology, as the principles of blockchain imply partnership. Creating the consortium makes it possible to involve market leaders in the research.

The Central Bank promises to provide more detailed information regarding the tasks of the consortium in the near future.

Creating a blockchain consortium seems to be a step forward towards a more articulated official position regarding the technology in Russia. This is exactly what Andrey Kostin, President and Chairman of one of the largest Russian banks VTB, urged to do during the International Financial Congress in St. Petersburg.

Sharing his experience of visiting Silicon Valley and observing the latest fintech developments, the banker said about blockchain:

"It may be not a panacea, but there were three or four teams there that introduced me to this blockchain technology and they work with it really seriously. I believe, we also need some sort of a task force, to take a stand, because we still do not understand whether bitcoin is illegal or legal, or what to do with the blockchain.”

It is important to move on, and the financial sector should have a variety of organisations and companies, although the Central Bank should enforce supervision over non-banking organisations, emphasised Kostin. In spite of the complicated situation in the industry, conventional banks should not be afraid of the emerging fintech startups. Banks are able to compete: “We have resources, money and brains to do that.”

Senior Vice-President at VTB Bank Dmitry Breitenbicher earlier noted that digital currency might have a great future although it would hardly come in the short term.

“There are two points of view regarding bitcoin – one of caution and one of anticipation. Back in its days, there was no enthusiasm about the arrival of paper money neither from banks nor from consumers. It was gaining their trust gradually. Therefore, maybe in 10-20 years’ time cryptocurrencies will turn from something exotic into a real means of payment and store of value.”

Currently, there is no clarity in the Russian legislation regarding bitcoin. A prohibitive draft law which demands criminal prosecution for issuing and using cryptocurrency was produced by the Ministry of Finance but was not approved of by the Ministry of Justice. As CoinFox has reported, the Minfin is going to issue a new version of the draft law in August. In spite of all amendments, the Ministry is still seeking to criminalise the circulation of non-fiat currencies in Russia.

In the meantime, the blockchain technology per se attracts a rather favourable interest of Russian regulators, who emphasise the need for its further development and a proper legal framework. Blockchain is the future of the world’s financial system, stated deputy chief of the Central Bank Olga Skorobogatova. Prime Minister Dmitry Medvedev claimed earlier that creating a legal platform for the blockchain technology “is quite an unusual task for lawyers to find new efficient solutions, which can, in fact, become a basis for a new branch of law.”

The 25th International Financial Congress hosted by the Central Bank of the Russian Federation takes place on 29 June to 1 July in St. Petersburg and brings together experts, representatives of banks and non-banking financial organisations from all over the world.

Andrew Levich