Yesterday Russian bank VTB said it issued a digital bank guarantee on the Masterchain blockchain, which is in production. Masterchain is an Ethereum blockchain variant that uses Russian cryptography, was co-developed by the Bank of Russia and commercial banks, and is operated by the FinTech Association. The guarantee for 392 million rubles ($5.4 million) was issued in favor of MTS PJSC, the digital, medial and telecoms firm.
The FinTech Association was keen to highlight that the digital guarantee is legally binding without the need for a paper document.
“This makes it possible to speed up the process of obtaining guarantees by the beneficiary and to reduce paperwork,” said Vadim Kulik, VTB Deputy President and Chairman of the Management Board. “In addition, placing data in a distributed ledger eliminates the risks of fraud with bank guarantees.” In other words, the beneficiary can verify that the guarantee is legitimate.
Apart from VTB, the other organizations on the platform that can issue guarantees are Gazprom Neft, Alfa-Bank, PSB, Raiffeisenbank and Ak Bars. Each participant has their own node on the network.
“In the future, insurance and logistics companies will be able to connect to the system,” said Tatiana Zharkova, General Director of the FinTech Association. “We see significant interest in the service and plan to develop the Masterchain platform to work with other types of trade finance transactions.”
Last year the FinTech Association announced plans for an electronic mortgage solution using Maseterchain. This year, Russia’s central bank said it might soon support a distributed registry for electronic mortgages on Masterchain. The Federal Service for State Registration (Rosreestr), which maintains real estate registries in the country, was also involved in the discussions.