Sber partners with JP Morgan to pilot digital currency in 2021
Sber, Russia’s largest bank with some 100 million customers, has partnered with JP Morgan to unveil its digital currency next year.
CEO, Herman Gref, confirms that Sber – which recently dropped the “bank” from its name to sound more like a Big Tech – would call it Sbercoin.
Sber revealed its intentions around developing its own stablecoin back in August. But this is the first time JP Morgan – America’s largest bank by assets – has announced its involvement in the project.
Gref says the it will begin as “an experiment” next year. But it hasn’t confirmed whether it will carry it on beyond a pilot stage.
Why JP Morgan?
JP Morgan has already developed its own digital currency, JPM Coin.
The US lender launched the coin back in February 2019. Pegged to the dollar, it facilitates the bank’s interbank payments instantly.
In May, the bank became the first of its size in the US to serve bitcoin exchanges Coinbase and Gemini, according to the Wall Street Journal.
The bank sold its enterprise blockchain platform, Quorum, in August. This means projects built internally on Quorum by JP Morgan are enjoying development outside of the bank.
JP Morgan managed to build up its Interbank Information Network to 200 bank members before selling the technology.
Russia’s crypto law come January
Russia announced its new cryptocurrency law this year, set to come into effect in January 2021 ahead of Sber’s pilot.
Known as On Digital Financial Assets (DFA), the law passed in July, gives legal status to cryptocurrency. But it prohibits its use as a means of payment.
This means Russian residents can’t transact in bitcoin or any other cryptocurrency. But it will legalise crypto-to-crypto trading platforms, and will allow firms to purchase and sell crypto, as well as lend in crypto.
Alongside this law, the Central Bank of Russia drew up a draft around issuing digital rubles earlier this year. It calls it “a third form of money”.
But Sber wants to go further than the central bank’s definition and add a tracking number on each digital ruble. It also wants to settle payments under smart contracts to solve issues around fund misappropriation.
As Finance Magnates points out, these stipulations would allow Sber and other commercial banks to maintain the account for non-cash digital currencies – rather than the state-regulated bank.
The platform is a sure thing
The bank – and this is confirmed, rather than being reviewed – is launching its own blockchain platform built on Hyperledger Fabric.
It’s designed for trade finance transactions, including exchanging letters of credit, according to the bank’s statement to CoinDesk back in August.
The nodes are hosted in Sber’s own cloud computing service, SberCloud. The bank says the system will be open, so any firm would be able to join and set up its own node.
Following in the footsteps of Raiffeisen Bank?
Raiffeisen Bank International (RBI) spoke to FinTech Futures in June about its own plans to launch a private digital currency.
The Austrian bank’s blockchain hub lead Stefan Andjelic said a central bank digital currency (CBDC) “wouldn’t be enough” for what it had planned for tokenisation.
This is why RBI decided to partner with fintech Billon last October to build its own tokenisation platform.
The bank wants to create a solution which can facilitate faster cross-border payments. It also wants to offer a coin which is currency agnostic.
That would mean it could be both euro-backed and, in future, backed by other currencies such as the Ukrainian hryvnia or the Croatian kuna.