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Russia's Largest Two Banks To Test Crypto Products In Regulatory Sandbox

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Russia's biggest two banks, Sberbank and Alfa Bank, are planning to test several private banking products based on cryptocurrencies in a regulatory sandbox environment hosted by the Russian central bank, the Kommersant newspaper reported.

The decision to test cryptocurrency-enabled products were made during a round-table last Wednesday. The entire pilot testing process is expected to last no more than 45 days.

The products for the pilot projects were created by working groups on "Advanced Compatibility with Regulator" involving private banking divisions of Sberbank, Alfa Bank, AddCapital fund and the National Settlement Depository of Russia.

Cyber-security support is provided by the software company, Group IB, and legal backing is given by the professional services firm, AltHaus.

The banks plan to pilot two box solutions in the "regulatory sandbox." These are exchange algorithms, which are deterministic and contain no hidden parameters, and are self-adapting to the situation on the market with a low transaction frequency, the report said.

They also work well on traditional assets and are structured in such a way as to allow a "manageable" entry for clients.

The algorithms will operate on an investment portfolio that is a collection of the six most popular cryptocurrencies such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin and so on, accounting for 75 percent of the overall digital asset capitalization.

Clients will receive a fund unit each, which is liquid as it can be converted to the currency of the client any time. Crypto trades will be carried out only on audited exchanges such as Bitstamp and Kraken.

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