Sberbank, the biggest bank in Russia, is pushing ahead with the plan to deploy its decentralized finance (DeFi) platform. The bank is now getting ready to test out the product within the next few months.
The head of Sberbank’s Blockchain Lab, Konstantin Klimenko, said on February 3 that the financial institution anticipates beginning open trials of its DeFi platform by May 2023. This information was published by the regional news outlet Interfax.
Critics argue that the system has few applications in the real world and suffers from the same drawbacks as the cryptocurrency world, such as a lack of regulation and a vulnerability to fraud and money laundering. Proponents of the system argue that it could reduce the costs of banking and could eventually even replace traditional banks.
Traditional financial firms are examining how they might enter this market and how they can incorporate decentralized finance technologies into their already regulated business models.
According to statements made by Konstantin Klimenko, director of products at Sberbank’s blockchain laboratory, the bank plans to begin open testing of its platform in March, with the goal of beginning commercial operations by the end of April.
Klimenko added that the DeFi platform that Sberbank is developing would be built on the Ethereum blockchain, which is now the second-largest blockchain in terms of market capitalization behind bitcoin.
Over the course of the previous several years, Sberbank has had a difficult time launching various blockchain products owing to repeated delays in registration by the Russian central bank.
Sberbank had anticipated launching its digital asset issuance platform in 2021, but it did not gain clearance from the Bank of Russia until the spring of 2022. The Russian government owns 50% plus one share of Sberbank, making it the institution’s largest stakeholder.
In November, at an event that Sber Blockchain Laboratory sponsored, Sberbank made public for the first time its intention to link its platform with Ethereum.
Because the bank’s blockchain network is integrated with the leading smart contract ecosystem, it is now possible for developers to easily move smart contracts and whole projects from one blockchain network to another.
Russia and crypto
The relationship between Russia and cryptocurrencies is fraught with tension. On the one hand, the government has shown support for the technology and is investigating the many ways in which it may be incorporated into the economy.
On the other hand, it has been making efforts to control cryptocurrencies and implement stringent regulations around their usage.
The Russian government approaches cryptocurrencies with caution because it does not want them to be used in illegal activities or for money laundering.
However, the Russian government recognizes the potential of blockchain technology and is actively investing in projects that make use of these technologies.
For the time being, Russia’s general stance toward cryptocurrencies is still considered to be ambiguous. Before any judgments are taken, both the positive and negative aspects of the situation are being attentively analyzed.
Russia’s relationship with cryptocurrencies is still evolving, with both potential risks and opportunities being explored as the technology matures. As more countries embrace cryptocurrencies around the world, Russia will have to balance its skepticism about this nascent technology with its potential benefits for its economy.