The impact of sanctions and the collapse of the Russian ruble after the invasion of Ukraine has some Russian banks turning to the crypto market for a boost.
Like the biggest one.
That is Sberbank, Russia’s largest lender, which just received a license from the central bank to issue digital assets to clients on Thursday. Sberbank said the move would allow Russian firms to mint digital assets and “invest their currently idle funds to generate income.”
“We are just starting our work with digital assets, realizing that further development requires adaptation of the current regulatory framework. To do that, we are ready to work closely with the regulator and executive bodies,” Sberbank said in a statement. “Companies will be able to make their first transaction on our blockchain platform one month from now.”
In February, the Blockchain platform Atomyze became the first firm to receive a license in Russia to exchange digital assets. Now, Sberbank and the financial ecosystem Lighthouse have also been given the green light to enter the crypto fray.
The Central Bank of Russia’s decision to allow Sberbank to issue digital assets is a swift departure from its prewar crypto stance. Russian authorities previously sought to ban cryptocurrencies altogether in 2021, and the central bank went so far as to call them a “threat to financial stability.”
For Sberbank, the Central Bank of Russia’s crypto pivot is a welcome prospect. The lender has been attempting to enter the crypto market since late 2020, when CEO Herman Gref said the bank was preparing to launch its own cryptocurrency, called Sbercoin, with help from JPMorgan.
Now, with JPMorgan following other top investment banks and asset managers in an exodus from the country, it looks like Sberbank has found its own way into the crypto space.
And Sberbank needs it—the bank lost more than 95% of its value on the London Stock Exchange after Russia’s invasion of Ukraine began on Feb. 24.
Struggling to survive
Investors in Sberbank have been left guessing at what its true value may be when trading resumes, as the Moscow exchange has been shuttered since the war began.
Sberbank’s subsidiary based in Austria, though, was completely dissolved after large outflows of cash made its failure likely, the EU’s resolution authority announced on March 1.
With banks in Russia struggling, the central bank was forced to step in and provide some much-needed cash after the war began. The Central Bank of Russia (CBR) imposed a $10,000 withdrawal limit effective until Sept. 9 in hopes of stabilizing banks after Russians withdrew over 110 billion rubles in just the first day after the war began.
The CBR also hiked its key interest rate, similar to the Fed funds rate, to 20% in hopes of spurring bank deposits. Still, banks in Russia are continuing to feel the pain from Western sanctions and their latest move into crypto could be viewed as another worrying sign by some investors.
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