VTB, the second largest bank in Russia after Sberbank, has tested a new blockchain-based system for issuing bank guarantees.
According to an official announcement on December 16, VTB granted the country’s largest cellular network provider, MTS, a blockchain-enabled bank guarantee.
As part of the development, the bank MTS issued a guarantee for the fulfillment of payment obligations in the amount of 392 million rubles, or $ 5 million. The commercial operation implemented Masterchain – an Ethereum-based blockchain prototype supported by the Russian central bank.
The parties completed the transaction in real time, with VTB issuing a digital guarantee signed with an amplified qualified signature. Then MTS accepted the document and sent a notification to the bank.
Vadim Kulik, vice president and chairman of VTB’s board of directors, said the new integration allowed the bank to speed up the process of issuing guarantees and significantly reduce paperwork. The blockchain deployment also eliminates the risk of fraud associated with bank guarantees.
Alexander Smirnov, Director Corporate Finance at MTS, emphasized that the bank guarantee system based on Masterchain will also reduce operating costs and increase competition between the participating banks.
VTB did not immediately respond to Cointelegraph’s request to provide additional development details.
Masterchain was launched in 2016 and is known as the first Russian certified blockchain platform that uses local cryptographic data protection methods. The platform was developed by the Russian Fintech Association together with the Bank of Russia and major financial players such as Sberbank, Alfa Bank, Tinkoff Bank and Qiwi.
VTB’s move to introduce blockchain-based guarantees takes place amid a number of large Russian banks that are actively engaged in blockchain technology.
In early 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-owned bank – joined a blockchain-based platform for financing commodities trading through its Swiss subsidiary.