Sberbank criticized the blockchain of the Central Bank of the Russian Federation

The largest bank in Russia, Central and Eastern Europe – Sberbank withdraws from participation in the Masterchain blockchain launched with the support of the Central Bank of the Russian Federation. This was stated by Oleg Abdrashitov, the head of the blockchain laboratories of the bank, complaining about the poor speed, low security and inefficiency of the platform.

As an alternative, Sberbank is considering Western corporate blockchain platforms Hyperledger Fabric from IMB and Quorum from JPMorgan.

“Masterchain” does not meet the requirements of Sberbank cases, so for all future research we will use corporate platforms, such as Hyperledger Fabric or Quorum, ”said Abdrashitov.

Representatives of Raiffeisenbank, which also participates in Masterchain, recently admitted that they are also investigating other corporate blockchain platforms, including HyperLedger Fabric, Corda from the R3 consortium, and its own Ethereum-based framework called R-chain.


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Russian Bank Sberbank to Seek Alternatives to ‘Inefficient’ Central Bank-Backed Masterchain

Sberbank, Russia’s largest lender, is to scale down its participation in Masterchain, a blockchain project led by the country’s central bank, calling it “ineffiecient, insecure and slow”.

Oleg Abdrashitov, head of Sberbank’s blockchain lab, told Coindesk the institution was winding down its participation in Masterchain and would seek opportunities using more widely-proven enterprize blockchain platforms.

Coindesk reported Abdrashitov as saying:

Masterchain does not satisfy the requirements for Sberbank’s use cases, so for all future exploration we will use enterprise blockchain platforms such as Hyperledger Fabric or Quorum.

Mortgage Bond Custody

By March 2017, Sberbank was in control of around half of Russia’s mortgage market reported Vedomosti, the press-service of the state-backed institution.

Indeed, the primary use case Sberbank intended for the enterprize platform was as a decentralized depository for digital mortgage bonds.

Such a use case could potentially save Sberbank millions of dollars a year by cutting out the National Settlement Depository, a Moscow-based exchange group and clearing facility that charges a small fee per mortgage bond it holds as custodian.

Masterchain Launch Delayed

The Masterchain trial use case started last autumn and was set to be deployed in August, but this launch date has been delayed as technical developments have slowed.

Masterchain was conceived from a fork in the Ethereum blockchain, and built according to laws regulating the use of cryptography, which is highly restricted in Russia. This means the system is highly centralized.

Abrashitov also told Coindesk the system was too “slow and insecure”, with a single mortgage bond taking three minutes to upload onto the Masterchain.

He said: “Business people are not used to dealing with something where you push a button and then you go take a break [until it works]. The leadership is looking at that and gets disappointed in the blockchain tech. We are spending shareholders’ money [on blockchain exploration]. We need solutions that are practical.

Abdrashitov also explained that the Masterchain blockchain was inefficient, making it impossible to use the platform for several purposes at the same time. So for every use case a new network would have to be built.

Further Options Considered

And so, the state-controlled bank said it was backing out gently. While it will continue to participate in the project, its role and expected usage of any end product will be limited and the company intends to seek alternative enterprize platforms, naming the likes of Hyperledger Fabric and Quorum.

Hyperledger Fabric was developed by Linux and IBM for the execution of smart contracts and meets the use cases required by Sberbank for functions such as over-the-counter trading, trade finance and mortgage lending.

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Russia’s Largest Bank Conducts $12 Billion Transaction Using Smart Contracts

Shunning blockchain and smart-contracts for years, financial institutions are finally waking up to the potential that decentralized technologies hold, with a flurry of government and corporate companies making moves into the sector.

Mammoth Transaction, Minimal Traction

According to an official release on May 16, 2018, Russia’s largest bank, Sberbank, recently utilized a Hyperledger Fabric-based smart-contract system to issued rouble-backed bonds for a transaction.

The development saw Sberbank CIB, the investment division of Sberbank, the National Settlement Depository (NSD), and MTS, a Russian telecom operator, come together to conduct a RUB 750 billion bond issue, equivalent to $12.15 billion.

Historically, the commercial bond market has been limited to exclusive players, with most bond exchanges occurring Over-The-Counter (OTC) instead of digitally. With this successful transaction, Russian authorities are undeniably appraising the use of a robust blockchain-based system, which can dispose of the traditional methods and arguably provide a faster, safer exchange system.

As per the report, the parties also tested a blockchain-based delivery versus payment settlement model, that allowed for the simultaneous transfer of money and securities.

Authorities Fully Impressed with Blockchain’s Potential

Using the latest version of the Hyperledger Fabric, the participants were able to fully track every detail of the transaction, from placement to the issuer’s performance of its obligations to investors, and finally, its settlement in roubles.

Hyperledger Sawtooth: Blockchain for the enterprise https://t.co/AtRC9uOXsn

— Hyperledger (@Hyperledger) May 17, 2018

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All parties, the investor, issuer, and depository were able to access the decentralized platform during the transaction. Additionally, the operation was conducted in full confidence and knowledge of Russia’s legal authorities, in line with current standards.

The parties noted the impressive features of using a blockchain system, particularly its wholly digital nature. In addition, the participants were pleased to track their transaction, exchange any required documents, and have a significantly faster bond exchange process.

Speaking about the development was Igor Bulantse, Senior Vice President of Sberbank CIB:

“This MTS bond issue not only allowed us to confirm the reliability, efficiency and secure nature of the blockchain platform and carry out complex structured transactions involving securities, but also demonstrated the potential that this technology has to develop Russia’s digital economy.”

Echoing his thoughts was Andrey Kamensky, Vice President of MTS, who praised the system’s speed, ease-of-use, and transparency. Additionally, Kamensky placed full-faith in smart contracts, and said that “MTS will continue using blockchain.”

Finally, the Chairman of Russia’s NSD, Eddie Astanin, added his views on the process:

“The deal with Sberbank and MTS was the first of its kind, and shows that blockchain is a mass-use technology that provides confidentiality and speed when working with securities.”

Astanin believes the transaction is a “vital step” towards the creation of blockchain-based systems for the financial markets.

With 145 million customers in 20 countries, Sberbank is undisputedly a major financial player, and its successful usage of a smart-contract system may prove to be the litmus test for many global developments to come.

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Sberbank and MTS issue Russia’s first commercial bond deal on NSD blockchain platform

Sberbank and MTS issue Russia’s first commercial bond deal on NSD blockchain platform 9405

Blockchain

May 17, 2018 at 11:33 AM

State-owned Russian banking and financial services company Sberbank and largest mobile operator in Russia, Mobile TeleSystems MTS have developed and conducted the first Russian issue of commercial bonds via smart contracts. The operation was carried out utilizing blockchain platform which was developed by National Settlement Depository (NDS). NDS’s technology is based on HyperLedger Fabric 1.1.

Sberbank CIB is organizing the issue of MTS corporate bonds with 6-month maturity term for a total amount of 750 million rubles (about $12 million).

The head of Sberbank CIB, Igor Bulantsev said, “Issuing MTS bonds has not only allowed us to confirm the reliability, efficiency, and safety of the blockchain-based platform for organizing and conducting complex structured securities transactions but also demonstrated the great potential of the technology for the development of Russia’s digital economy.”

As a part of this transaction, National Settlement Depository conducted a settlement model, a full Delivery versus Payment (DVP) settlement model which is based on the blockchain. DVP simultaneously allows transferring securities and funds. Also, to work with a big circle of investors they added an option for changing the composition of network participants. They even updated the system to the latest version called as Hyperledger Fabric.

The initiative ensures confidentiality for transactions between three parties, depositor, issuer, and the investor. Also, the parties involved in the transactions were allowed to exchange documents online and verify transactions status in real time. Full transactions and executions can be checked online by all the parties from placing securities and receiving funds.

NSD chairman, Eddie Astanin, said, “In the first quarter of 2017, NSD began developing the prototype of the platform to conduct bond transactions. The Sberbank and MTS transaction was the first one which gave blockchain the status of an industrial technology which ensured confidentiality and accelerated securities settlements. Our final task is to create digital asset accounting infrastructure together with market leaders; the existence of the infrastructure is a crucial condition for institutional investors to enter our market and for the market’s successful development and increase in its capitalization.”

Earlier this year Sberbank, the biggest lender in Russia, announced the launch of a lab that will work on blockchain projects.

Image source: Sberbank

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Sberbank Completes First Blockchain-Enabled Commercial Bonds Transaction in Russia

Sberbank CIB, the corporate and investment banking business of Russia’s largest bank Sberbank, conducted the first blockchain-based commercial bond transaction in Russia, according to a Sberbank announcement May 16. The transaction was completed in partnership with MTS, a leading Russian telecoms operator, and the National Settlement Depository (NSD).

Sberbank CIB organized the issue of MTS corporate bonds for the value of RUB 750 bln ($12 mln) with 6-month maturity, using smart contracts. The transaction was carried out on the Hyperledger Fabric 1.1-based blockchain platform provided by the NSD.

Commercial bonds are unsecured fixed-income securities issued by a company and placed on an over-the-counter (OTC) market through a private subscription. In order to conduct the transaction, a complete Delivery versus Payment settlement model was reportedly implemented using blockchain technology, which made the transfer of the bonds and money simultaneous.

All three parties received access to the blockchain platform to perform the transaction, which ensured transparency and confidentiality in dealing with the accounts, and met the requirements set forth by Russian law. Each participant of the deal could exchange documents online and track the transaction status in real time. Igor Bulantsev, Senior Vice President of Sberbank and Head of Sberbank CIB, said:

“This MTS bond issue not only allowed us to confirm the reliability, efficiency and secure nature of the blockchain platform and carry out complex structured transactions involving securities, but also demonstrated the potential that this technology has to develop Russia’s digital economy.”

Eddie Astanin, Chairman of the Executive Board of the NSD, noted:

“The NSD was one of the first organizations in Russia to adopt blockchain. We began working on a prototype platform for carrying out bond transactions in Q1 2017. The deal with Sberbank and MTS was the first of its kind, and shows that blockchain is a mass-use technology that provides confidentiality and speed when working with securities.”

He further added that the end goal of the agency is development of an infrastructure for recording digital assets in partnership with market leaders.

In December, Russia completed its first government-level blockchain implementation. Sberbank announced that it is partnering with Russia’s Federal Antimonopoly Service to implement document transfer and storage using blockchain technologies.

Earlier today, the Russian State Duma’s Committee for Legislative Work supported a bill “On Digital Financial Assets”, which was first prepared in March of this year. According to Pavel Krasheninnikov, head of the Legislative Work committee, the bill aims to “minimize the existing risks of using digital objects for transferring assets into an unregulated digital environment for legalization of criminal incomes, bankruptcy fraud or for sponsoring terrorist groups.”

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The savings Bank has declared war on cybercrime

Under the auspices of the world economic forum starts Global cyber security center. This was stated by Deputy Chairman of Sberbank, Stanislav Kuznetsov, speaking at the opening of the Center in Davos, Switzerland. The organization should be a key milestone in the development of the vast initiative of the WEF”s cyber security project, “Cybercrime project”, which the Russian Bank took an active part. The fact that cyber threats are becoming one of the major risk factors for the economic, financial and social spheres of life in the digital age, realize in all developed countries. Creating a platform for combating international cybercrime should be a powerful answer to hackers – the authorities of all levels and experts do not doubt.


photo: Natalia Gubernatorova

At a press conference in Davos, Stanislav Kuznetsov, said that Sberbank, which has already adopted the digital economy and take action against emerging cyber threats, expect development strengthen Bank’s position in this area with the opening of the Global centre for cyber security. “The centre should function as a unique platform of public-private partnerships, the development of which will occur in three key areas. These directions establish a mutually beneficial cooperation between public and private corporations, the formation of the necessary conditions for the organization of permanent exchange of information and the establishment of a reliable research centre, carrying out an independent assessment and analysis of the current situation in the field of cybersecurity in the international arena”, – said Deputy Chairman of Sberbank.

He also added that, for its part, Sberbank is ready to share with the participants a unique Center of information about the activities of large groups of criminals that commit attacks in the financial sector at the international level. “Last year we were able to prevent 100% of attacks against us,” Kuznetsov recalled and added that with the global threat of cybercrime to deal more effectively with joint efforts and to seek to ensure the security of the information space. As experts consider, in this regard, the experience of the most progressive Russian Bank whose clients are 120 million people, it can be very useful to other organizations around the world.

About the need to respond quickly to all the explosions of technological changes that occur in the modern world, said recently the Prime Minister of Russia Dmitry Medvedev at the Gaidar forum. He noted that today the risks of cybercrime make vulnerable all spheres of life, and gave the example that, unlike deadly weapons, aviation, submarine fleet, cyber warfare does not require large-scale industrial base, and therefore extremely dangerous. “Therefore, it is obvious that today all countries need much more efforts to ensure security in the digital space and closer coordination,” he called for cooperation in confronting cybercrime the Chairman of the government of the Russian Federation.

In 2017, against hacker attacks, the business has lost hundreds of billions of dollars in the financial sector criminals hacked ATMs, e-wallets and even entire payment system. Over the past year about 15 hacker groups attacked government structures, military establishments and private companies.

In the capture of members of one of these groups participated Sberbank. The savings Bank has supported law enforcement agencies, organized the collection of necessary information, which helped to prove the guilt of criminals.

General Director of information-analytical Agency Telecom Daily Denis review: Dewdrop said in an interview with “MK” which is now the wide spread of electronic money, Bank cards, electronic payment systems have led to the fact that the problem of cybercrime has covered a huge audience. “This is a common problem and work it must. Sberbank as the largest financial institution in Russia, which is responsible for the safety of their assets and millions of customers, can not do otherwise than to stand at the head of this struggle. They understand that they are to suffer most from cyber threats, so quite adequately decide this issue,” – said the expert.

“Our country, including President Vladimir Putin, has always strived to address the issue of cyber security at the international level: this issue was raised by Russia at the meetings of the “Big twenty”, and in the negotiations with the Americans were asked to talk about cooperation in this sphere. The establishment of the Global cybersecurity centre at the base of the WEF and the efforts of the savings Bank is very important because cyber attacks increase, grow in number and power, are a serious damage to individuals and legal entities in all countries. With such threats we must fight together”, – said in a conversation with “MK” Sberbank supported the initiative of the Chairman of the Duma Committee on financial market Anatoly Aksakov.

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Russia’s Biggest Bank Pilots Money Transfer on an IBM Blockchain

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Sberbank has piloted the Russian banking industry’s first ever payment transaction over a blockchain.

Sberbank, Russia’s biggest bank by assets, has executed a real-time money transfer over an IBM-built blockchain based on the Hyperledger Fabric – a blockchain software. The transaction involved a money transfer of an unknown sum between a payer and a receiver in two separate banks, facilitated by Sberbank’s IT systems complete with a web application for the bank’s client to track the transfer.

As reported by CCN in July, the Linux Foundation-led open-source Hyperledger blockchain consortium formally released its first production-ready blockchain software in the Hyperledger Fabric 1.0.

“The blockchain solution created by Sberbank has allowed us to make the first pilot payment transaction – using IBM Blockchain technology – in the history of the Russian banking industry,” Sberbank’s managing director Stella Kudachkina said.

Sberbank also listed a number of participating partners involved in the pilot payment transaction, hinting at a future of blockchain payments for retail banking customers. They include MegaFon, Russia’s second-largest mobile phone operator; MegaLabs, a Moscow-based IT solutions provider; Alfa-Bank, a major Russian private bank and; technology giant IBM.

Notably, Sberbank and Alfa-Bank hosted the blockchain’s nodes with the ultimate aim to “serve as the primary scenario for developing a new settlement function” between the two banks.

The Sberbank executive added:

The advantage of using this technology when performing settlements is the high speed at which transfers are made: after the money is sent the transaction is recorded on the receiver’s account almost instantly, in real time, unlike the traditional system that is used to make transfers.

Sberbank’s announcement comes within months of the bank joining the Enterprise Ethereum Alliance (EEA), a consortium of companies, startups and governments working to leverage open-source Ethereum blockchain technology for enterprise solutions.

Earlier this year, the bank’s chief executive Herman Gref – notably a bitcoiner – claimed that Russia will see commercial applications of blockchain technology by 2019.

Featured image from Shutterstock.

Russia’s Largest Bank Conducts First Blockchain Payment Transaction

Russia’s Largest Bank Conducts First Blockchain Payment Transaction

Announcements, Blockchain | December 5, 2017 br>By:

Russia’s Sberbank has conducted the country’s first payment transaction using the blockchain technology. The participants involved in the pilot include MegaFon, MegaLabs, Alfa-Bank, and IBM.

The Russian bank said the blockchain payment transaction used the IBM Blockchain platform on the basis of HyperLedger Fabric, an open source blockchain framework and one of the Hyperledger projects hosted by the Linux Foundation. The platform is designed for distributed ledger solutions, underpinned by a modular architecture delivering high degrees of confidentiality, resiliency, flexibility and scalability.

Sberbank CIB, the bank’s corporate and investment banking business, organized the blockchain payment transaction. It used the bank’s information technology (IT) infrastructure to set up a service for establishing the uniform transaction procedure, the certification center of the network, and a web app for the client with a personal account section. In addition, Sberbank and Alfa-Bank hosted the nodes of the blockchain network.

Sberbank CIB Managing Director Stella Kudachkina said the blockchain solution created by the bank has allowed them to make the first pilot payment transaction in the history of the Russian banking industry. She added that the advantage of using this technology when performing settlements is the high speed at which transfers are made.

“After the money is sent the transaction is recorded on the receiver’s account almost instantly, in real time, unlike the traditional system that is used to make transfers,” said Kudachkina.

Sberbank is a state-owned Russian banking and financial services company headquartered in Moscow. The company has operations in several European and post-Soviet countries. It is the largest bank in Russia and Eastern Europe, and the third largest in Europe.

In April, the R3 blockchain consortium denied the application of the bank to join the rest of the banks in the consortium due to international sanctions against Russia. In October, Sberbank joined the Enterprise Ethereum Alliance, becoming the first Russian bank to join the distributed ledger consortium.

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Russia’s Sberbank conducts blockchain-based payment transaction

Sberbank, one of the largest banks in Russia, has announced that it has conducted the country’s banking industry’s first-ever pilot blockchain payment transaction.

The participants involved in the pilot include MegaFon, MegaLabs, Alfa-Bank, and IBM. The transaction used the IBM Blockchain Platform on the basis of HyperLedger Fabric. Sberbank joined the Linux Foundation’s Hyperledger blockchain project in 2016.

The blockchain-based payment transaction was organized by Sberbank CIB, the bank’s corporate and investment banking business. It used the bank’s IT infrastructure to set up a service for establishing the uniform transaction procedure, the certification centre of the network, and a web app for the client with a personal account section. In addition, Sberbank and Alfa-Bank hosted the nodes of the blockchain network.

In its official release, Sberbank said that the technological process which was created will serve as the primary scenario for developing a new settlement function.

“The blockchain solution created by Sberbank has allowed us to make the first pilot payment transaction – using IBM Blockchain technology – in the history of the Russian banking industry,” commented Sberbank CIB Managing Director Stella Kudachkina. “Above all, the advantage of using this technology when performing settlements is the high speed at which transfers are made: after the money is sent the transaction is recorded on the receiver’s account almost instantly, in real time, unlike the traditional system that is used to make transfers.”

Earlier in June, Sberbank announced its cooperation with Severstal to carry out international letter of credit transactions using blockchain technology.

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