Bank loan using WAVES tokens could be deemed illegal┃Russia
Expobank found an innovative way to issue loans amid Russian crypto regulation ambiguity
According to Russian news outlet Kommersant, Russian bank Expobank has issued Russia’s first loan that is backed by crypto to businessman Mikhail Uspensky.
Alexander Ivanov, the CEO of Waves, stated that WAVES acted as collateral for the loan and Expobank is the only financial institution collaborating in this project.
Kommersant stated that the key principle of this transaction is to find the most legal qualification for the token. Alexander Zhuralev, the legal counsellor for the transaction, argued that the token must at least reside under “other property” according to the Civil Code of the Russian Federation.
The “other property” will later be placed in an escrow in order to secure the loan. Kommersant describes escrow as “in Russian law is the best way to quickly fulfil obligations to a creditor by transferring property in the form of deposited digital assets”.
Legality of the loan
Earlier in July, the Kremlin passed a bill to provide a legal definition for cryptos. The bill restricted digital assets from being a form of payment.
Regarding this bill, many have expressed their opinion upon the legality of such a project. Some like Kirill Nikitin, a senior lawyer at Vegas Lex law firm, praised the project for its innovative nature and expressed that it is likely to be permissible under Russian law.
Nikitin later clarifies that there are still some legal uncertainties regarding the determination of its legal status.
For now, the project was successful, but as Nikitin said, it is still uncertain. As Russian crypto regulation is still in its infancy, the legality of Expobank’s experiment will unfold later on, especially during the beginning of 2021 where the newly introduced bill comes into effect.
Other projects may be coming
A few days after the bill was passed, Sberbank announced that it will be launching a blockchain built upon Hyperledger’s Fabric framework alongside a stable coin pegged to the ruble.
The bank’s intention for the blockchain is to provide businesses with smart contract technology immediately when the new bill is effective.
Anatoly Popov, Sberbank’s deputy chair, commented:
“Any company will be able to use smart contracts created by Sberbank right away or create their own”.
Despite the legal uncertainties surrounding tokens in Russia, there appears to be a demand for them in banking. Russian regulators are now faced with a real-world use case, and will need to further clarify their position in the coming months.