Sberbank Plans Crypto Custody Services Amid Russia's Pro-Crypto Shift

Sberbank, Russia's largest bank, has announced its intention to provide custody services for domestic crypto assets. This move comes as the bank seeks to expand its offerings in the digital asset space, following a proposal presented to the central bank regarding domestic crypto asset regulation. Anatoly Pronin, the Executive Director of Sberbank’s Alternative Payment Solutions Department, highlighted the bank's ambition to oversee crypto assets similarly to how it manages customer deposits, ensuring the security of tokens and promoting secure, accessible user transactions.

Pronin emphasized that the proposed custody service would include mechanisms to freeze assets upon suspicion of illegal activity, aligning with the bank's commitment to regulatory compliance and security. This development follows Russia's central bank's recent openness to pro-crypto policies, including permitting companies to trade in crypto to bypass Western sanctions imposed due to the Ukraine war.

In late May, Russia’s central bank disclosed plans to allow financial institutions to provide crypto investment products. These new rules would cover instruments such as derivatives and tokenized instruments tied to crypto value changes. However, investors would only be able to engage in non-deliverable contracts, meaning they cannot hold or receive cryptocurrencies. Financial institutions are required to follow a risk-averse assessment strategy before launching crypto instruments to avoid compromising financial stability. Despite these announcements, the central bank has not specified whether it would allow crypto custody services.

Sberbank has also been proactive in finding ways to facilitate transactions for its users. In June, the bank devised a workaround that routes wire transfers to European banks via intermediaries, avoiding Western sanctions and the SWIFT bans. This allows Sberbank’s clients to transfer rubles through its mobile app to European cardholders at certain financial institutions. However, the transfers do not display Sberbank’s name on the recipient’s side, instead showing the name of an individual, a regional city, or a payment processing entity. Both N26 and Revolut have distanced themselves from the alleged transfer scheme, insisting they prohibit any transactions that contravene sanctions.

In addition to its custody services, Sberbank has announced plans to become a market maker, providing liquidity for regulated platforms that will give qualified Russian investors access to cryptocurrencies like Bitcoin. Alexander Zozulya, the head of Sberbank’s Global Markets Department, praised the Bank of Russia’s development of an experimental legal regime (ELR) for crypto transactions. Zozulya expects the emergence of a legal ‘sandbox,’ an analogue of a regulated crypto platform, where super-qualified investors will be allowed to operate directly with cryptocurrencies. This follows recent comments by Central Bank of Russia Governor Elvira Nabiullina, who acknowledged that direct investment in crypto assets would necessitate regulatory reforms and the development of dedicated infrastructure. Such transactions should be carried out exclusively within the ELR framework and available only to “highly qualified” investors. In March, the Central Bank introduced the special regime and the “highly qualified investors” category, permitting Russian companies to use and exchange cryptocurrencies in foreign trade, providing a way to sidestep restrictions linked to the war in Ukraine.