Russia’s biggest bank, Sberbank, launched its own cryptocurrency after receiving permission from the Russian government on March 17. This came after several countries opted to implement a host of restrictions on Russia ever since they invaded Ukraine, which cut it off from most of the global financial system and their foreign currency reserves.
Days after the invasion of Ukraine, the Austrian financial regulator told Sberbank Europe on March 1 that they should ‘stop operations immediately’ under the instructions of the European Central Bank.
On March 2, Sberbank’s stock on the London Stock Exchange (LSE) plummeted to 95% and two days later, the LSE halted trading of Sberbank shares among other Russian companies ‘to maintain orderly markets’.
Two weeks after Sberbank halted operations in London, the Russian Central Bank granted them a license to issue its own cryptocurrency on March 17. They then launched Sbercoin on the same day.
There are speculations that Sbercoin would be used to exchange rubles with other fiat currencies to get around the constraints put by other countries. However, according to Asheesh Birla, the general manager of the blockchain-based payment service provider RippleNet, it is debatable whether Russia can use Sbercoin as an exchange for other currencies.
‘It’s going to be super-problematic for them to get much traction here because they also need a liquid exchange that is going to take the Russian ruble,’ Birla told Insider in their April 2 interview.
Birla added that while Russia can create their own cryptocurrency, it wouldn’t help much in moving money in and out of the country. Birla said ‘I’m not sure it’s going to be very helpful in terms of getting liquidity in and out of Russia. It’s like taking your own bank account and putting it into a ledger. It’s not all that useful unless you can start trading it for other things. So far, the data I saw is that it’s not very liquid.’
The US, along with its allies are concerned about whether Russia would use cryptocurrency to circumvent their financial sanction but research from blockchain analysis firm Chainalysis says this is unlikely to happen.
Even before the attack on Ukraine, there have been high volumes of ruble-denominated crypto-trading so even if the trading volume skyrockets after Sbercoin’s launch, it won’t necessarily mean that the country is using this to evade sanctions.
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