Sberbank and Alfa-Bank will play a little in the crypto currency

Crypto-currency private banking will be tested at the site of the Central Bank of Russia.
15.06.2018
Kommersant
Origin source
The largest Russian banks intend to test boxed solutions for private banking, based on digital financial assets (CFA), within the "regulatory sandbox" of the Central Bank. Products are algorithmic solutions for investment portfolios collected from the six most reliable crypto-currencies. Banks base their interest in such projects on the demand of large private clients who want to offer fully transparent solutions by the time of legalization of the CFA as investment assets.

The largest players in the banking market - Sberbank and Alfa-Bank - intend to test several products of private banking, based on crypto-currencies, on the regulatory platform of the Bank of Russia (the so-called regulatory sandbox). Such a decision was made last Wednesday during the discussion at the roundtable "Digital financial assets for banks, funds and large capital: the position of the regulator and solutions for investors."

The products for the pilot projects were created by the Working Groups of the "Forward Compatibility with the Regulator" (OCP) as part of the private divisions of Sberbank, Alfa Bank, the AddCapital fund and the National Settlement Depository (NSD) with the support of Group IB (in terms of cybersecurity) and AltHaus ( in the legal part). "We want to offer our clients an absolutely transparent version of the entrance to digital assets that fully meets the regulatory requirements that will allow them to invest in an interesting product in Russia," said Anna Ivanchuk, deputy head of Sberbank Private. According to Anton Rakhmanov, managing director for the development of the product offer for the Alfa-Bank's private wealth management unit, digital financial assets will sooner or later become a large part of the global economy and can not be ignored. "Our goal is to accelerate the adoption of a decision on the recognition of the CFA investment assets and introduce them into the legal field as quickly as possible," he said.

The chairman of the OCP, managing partner of AddCapital Alexei Prokofiev told Kommersant that two box solutions - Perceptron R and RQ - are planned for piloting in the "regulatory sandbox." In fact, these are exchange algorithms that have certain characteristics and are self-adapting to the situation on the market with a low transaction frequency. "Algorithms are deterministic, do not contain hidden parameters, they also work well on traditional financial assets. This was a requirement of partner banks, "explains Mr. Prokofiev. According to Ms. Ivanchuk, the product is structured in such a way as to make the entrance for the client "manageable".

The algorithms operate on the basis of an investment portfolio, which is collected by a fund of six most trusted crypto currencies at the moment (such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin, etc.), accounting for 75% of the capitalization of all digital assets in the world. The set of currencies in the portfolio is reviewed once a quarter, and their weights change dynamically according to the algorithm. According to Mr. Prokofiev, the algorithms show significantly higher yields than individual digital assets or indexes composed of them, this is shown by statistics from the end of last year.

"The client actually receives a fund unit. The assets of the fund are stored using custody solutions and audited by the Group IB cyber security. The unit is liquid, it is possible to request a withdrawal to the currency of the client at any time, "explains Mr. Prokofiev. According to him, trade is carried out only on audited crypto-exchanges - for example, Bitstamp and Kraken. Currently, the value of net assets in the digital assets of funds managed by AddCapital is more than $ 60 million. The threshold of entry into the product for qualified investors is about $ 500 thousand.

It is planned that the role of the depository for CFA storage in the project will be assigned to the National Settlement Depository. "NRM can act as a custodian and securely store, certify and protect the rights of investors in transactions with digital assets, the main characteristic of which is irretrievability in case of loss," says Sergei Putyatinsky, Director of Information Technologies of the People's Democratic Republic of India.

The application for participation of the project in the "regulatory sandbox" will be submitted in the near future. As explained in the Central Bank, the entire process of piloting takes no more than 45 days. Testing itself is from one day to two weeks, depending on the number and complexity of piloting financial services or technology. "The decision on the appropriateness of introducing tested products will be taken by the Bank of Russia jointly with government agencies only if risk management mechanisms are developed to ensure their minimization," the press service of the regulator explained.

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