Gazprombank, one of Russia’s largest financial institutions, is planning to perform some cryptocurrency deals by the end of the year. According to one of its top managers, the bank is responding to demand from “substantial clients”. The pilot transactions will be conducted through its subsidiary in Switzerland.
Working on Procedures, Looking into Options
The state-owned Gazprombank may try to conduct some cryptocurrency transactions on behalf of its customers as early as this year, Russian media reported. They will be channeled through its Swiss-based subsidiary, Deputy CEO Alexander Sobol told Interfax news agency.
“These will be pilot deals, not on a large scale. Some substantial private clients have asked for this kind of services,” Sobol explained. The bank is currently looking into different options to meet that demand. Gazprom’s subsidiary in Switzerland is studying the opportunities there. The alpine country has implemented more liberal regulations, he noted.
According to the high-ranking representative, the Russian bank has not yet developed crypto-related procedures. No decision has been taken to offer the new services to regular customers. However, Alexander Sobol stressed that the bank’s management is actively following [crypto]developments.
Gazprombank is the third-largest bank in the Russian Federation. It offers retail, corporate, investment and depositary services, as well as clearing and settlement products. It also deals with securities and forex instruments. Gazprombank owns shares in three other Russian banks and is operating in Belarus and Switzerland through subsidiaries.
Breaching AML Rules in Switzerland
About a month ago the Swiss Financial Market Supervisory Authority (FINMA) banned Gazprombank (Switzerland) from attracting new private customers. The regulator found deficiencies in its anti-money laundering procedures. The agency inspected more than 30 banks within an investigation which began in 2016 after the Panama Papers revelations. FINMA said that the bank had breached its own AML requirements between 2006 and 2016.
The Swiss subsidiary was founded as Russische Kommerzial Bank AG in 1992. It was renamed after its acquisition by Gazprombank in 2009. The bank specializes in financial operations related to the bilateral trade between Russia and Switzerland. It also provides services to Swiss companies investing in the Russian Federation and the CIS countries.
Cryptocurrency deals are not yet regulated in the Russian Federation. However, two draft laws aimed to change the status quo have been introduced in the State Duma this month. The bill “On Digital Financial Assets” is going to legalize blockchain technologies, mining operations and initial coin offerings. The other draft is supposed to amend Russia’s Civil Code in order to regulate the use of “digital money” and protect the investors. The bills should be adopted in June or July.
Earlier in March, a working group proposed tax exemptions on profits from crypto-related transactions after a meeting at the Ministry of Economic Development in Moscow. It gathered representatives of several government institutions and the private sector. Gazprombank also took part in the consultations.
Do you expect more Russian banks to enter the crypto sector after its legalization? Share your thoughts in the comments section below.
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Author: Lubomir Tassev