Six Russian banks have been testing the proposal. The project includes participants like Sberbank, Alfa Bank, VTB, Raiffeisenbank Russia, and Otkritie.
According to local media, Russia’s Central Bank will use a local blockchain platform for its next electronic mortgage project. The name of this blockchain platform is Masterchain and it is a government-backed blockchain project. Olga Skoronogatova, Bank of Russia’s First Deputy Governor, revealed the plan during an online meeting.
Skoronogatova held the meeting with the country’s parliament, the State Duma. During that meeting, the First Deputy Chief commented that a previously launched trial on a decentralized depository system for digital mortgage bonds was successful.
“We suggested to the government that we refine the project to the point when all kinds of transactions needed for the digital mortgage issuance can be done on Masterchain (…) This platform is working and, without further ado, we can complete this development,” Skorobogatova said.
The official also explained that six Russian banks have been testing Masterchain for exchanging digital letters of credit. According to the businesswoman, some other banks are ready to join. In this sense, Skorobogatova did not specify the names of the banks that are executing that effort. She also did not specify the names of the entities that might participate in the digital mortgage pilot.
About the Project
The proposal has progressed rapidly and positively. The Russian financial institution has already presented the proposal of its digital mortgage project to the government and the Federal Service for State Registration, Cadastre, and Cartography (Rosreestr).
Masterchain is the first blockchain platform in Russia that the Federal Security Service (FSB) has certified. According to local media previous reports, it is an authorized blockchain platform based on Ethereum. The FinTech Association launched this platform in 2017. The FinTech Association is an entity supervised by the Central Bank of Russia.
The project includes participants like Sberbank, Alfa Bank, VTB, Raiffeisenbank Russia, and Otkritie, as well as the National Settlement Depository, and the federal land registry service, Skorobogatova said.
Last May, this draft passed the first hearing (out of the three required). It has been left untouched until last week when the second draft was introduced together with a package of other laws.
Russian Government and Cryptocurrencies
This is not the first time that Masterchain works for electronic mortgages. In September 2018, a Russian subsidiary of Raiffeisen Bank International published mortgage documents containing data on the parties to the documentation, the credit loan, the duration, and the property acquired in the descending deposit system (DDS) from Masterchain.
The new package is proposing a procedure for issuing registered digital securities on the blockchain in Russia, whilst the Russian government bans any operation that users conduct with cryptocurrencies.
In fact, in mid-May, Russian lawmakers suggested penalties of up to 2 million rubles (USD 27,800) and seven years in prison for the illegal sale of digital assets and cryptocurrencies.
This demonstrates that the Russian government has been hostile with the use of cryptocurrencies, but friendly with the use of blockchain technology. However, the adoption of blockchain technology continues. Sberbank, the largest bank in Russia, will receive a tender to provide 4,917 ATMs that will be able to support “blockchain operations” in the country.
In the draft, Russia considers cryptocurrencies as commodities and specifies that users must report them for tax purposes.
By María Rodríguez
