VTB, Russia’s second largest bank after Sberbank, has experimented with a new blockchain-based bank guarantee system.

According to a December 16 official announcement, VTB has provided a bank guarantee using blockchain technology to the country’s largest mobile operator, MTS.

As part of the development of MTS, the Bank issued a guarantee for the fulfillment of payment obligations for 392 million rubles or 5 million dollars. The company has implemented Masterchain, an Ethereum-based blockchain prototype supported by the Central Bank of Russia.

Both parties completed the transaction in real time, with VTB issuing a signed digital guarantee with a verified qualification signature. Then MTS accepted the document and sent a similar notification to the bank.

VTB Vice President and Chairman of the Management Board Vadim Kollek said that the new merger allowed the bank to speed up the process of issuing guarantees and significantly reduce the volume of securities. He noted that blockchain proliferation also eliminates the risk of fraud associated with bank guarantees.

Alexander Smirnov, Director of Corporate Finance at MTS, stressed that the Masterchain-based bank guarantee system will also reduce operating costs and increase competition between the participating banks.

VTB did not immediately respond to Cointelegraph’s request for additional information on the development.

Created in 2016, Masterchain is recognized as the first certified blockchain platform in Russia using local cryptographic data protection methods. The platform was developed by the Russian Financial Technologies Association together with the Bank of Russia and major financial players such as Sberbank, Alfa-Bank, Tinkoff Bank and Qiwi.

VTB’s transition to blockchain-based security is taking place among a number of large Russian banks that are actively exploring blockchain technology.

Earlier in December, Alfa-Bank, one of Russia’s largest private commercial banks, announced a project that supports blockchain technology to automate services for freelancers. In September 2020, Sberbank – the largest state-owned bank – joined a blockchain-based platform to finance merchandise trade through its Swiss branch.

Source: CoinTelegraph