VTB, the second largest bank in Russia after Sberbank, has piloted a new blockchain-based system to issue bank guarantees.
According to an official announcement on Dec. 16, VTB provided a blockchain-enabled bank guarantee to the country’s largest mobile cellular network provider, MTS.
As part of the development, the bank issued MTS a guarantee for the fulfillment of payment obligations worth 392 million rubles, or $5 million. The commercial operation implemented Masterchain — an Ethereum-based blockchain prototype backed by the Russian central bank.
The parties completed the transaction in real time, with VTB issuing a digital guarantee signed with a reinforced qualified signature. Then MTS accepted the document, sending a corresponding notification to the bank.
Vadim Kulik, deputy president and chairman of the VTB management board, said that the new integration allowed the bank to speed up the process of issuance guarantees and significantly reduced paperwork. Blockchain deployment also eliminates the risks of fraud associated with bank guarantees, he noted.
Alexander Smirnov, director of corporate finance at MTS, emphasized that the Masterchain-based bank guarantees system will also reduce operational costs and increase competition among participating banks.
VTB did not immediately respond to Cointelegraph’s request to provide additional details about the development.
Introduced back in 2016, Masterchain is known as the first blockchain platform certified in Russia, using local cryptographic data protection methods. The platform was developed by the Russian Fintech Association alongside the Bank of Russia and major financial players like Sberbank, Alfa Bank, Tinkoff Bank, and Qiwi.
VTB’s move to introduce blockchain-based guarantees comes amid a number of major Russian banks actively exploring blockchain technology.
Earlier in December, Alfa-Bank, one of the largest private commercial banks in Russia, announced a blockchain-enabled project to automate services for freelancers. In September 2020, Sberbank — the country’s largest state-run bank — joined a blockchain-based platform for commodity trade finance through its Swiss subsidiary.