VTB, Russia’s second largest bank after Sberbank, has experimented with a new blockchain-based system for issuing bank guarantees.
According to an official announcement last Wednesday, VTB provided a blockchain-backed bank guarantee to the nation’s largest mobile operator, MTS.
As part of the development, the bank issued a guarantee of payment obligations to MTS in the amount of 392 million rubles, or 5 million dollars. As part of the commercial operation, Masterchain – a prototype blockchain based on Ethereum, was implemented with support from the Central Bank of Russia.
The two parties completed the transaction in real time, with VTB issuing a signed digital guarantee with an enhanced qualified signature. Then MTS accepted the document by sending a notice to the bank.
VTB Vice President and Chairman Vadim Kollek said the new integration makes it possible for the bank to significantly speed up the process of issuing guarantees and reduce securities. He said the introduction of blockchain also removes fraud risks related to bank guarantees.
Alexander Smirnov, Director of Corporate Finance at MTS, confirmed that the Masterchain-based bank guarantee system would also reduce operating costs and increase competition among participating banks.
VTB did not immediately respond to Cointelegraph’s request for more information on the development.
Introduced in 2016, Masterchain is recognized as the first certified blockchain platform in Russia with local crypto data protection methods. The platform was developed by the Russian Financial Technologies Association together with the Bank of Russia and major financial players such as Sberbank, Alfa Bank, Tinkov Bank and Kiwi.
VTB’s move to implement blockchain-based safeguards relies on a number of large Russian banks that are actively exploring blockchain technology.
Earlier in December, Alfa-Bank, one of Russia’s largest private commercial banks, announced a project supporting blockchain technology to automate services for self-employed. In September, Sberbank – the country’s largest state-owned bank – joined a blockchain-based platform to fund commodity trade through its Swiss subsidiary.