No bank wants cryptocurrency as an investment tool – Alexander Sotnikov
Banks do not view cryptocurrency as an investment tool. This is the opinion of Alexander Sotnikov, Blockchain & Bitcoin Conference Belarus speaker and Deputy Chairman of the Board of JSC Belgazprombank. We talked to him about the impact of the decree "On the Development of Digital Technologies" on the banking sector of Belarus and about banks’ attitude towards digital assets.
- Hello, Alexander. Tell us, how will the decree "On the Development of Digital Technologies" affect Belarusian banks?
- Hello. It is still difficult to say how it will affect the banking system. First, the decree has nothing to do with banks directly. Secondly, banks are now waiting for the decisions of the field regulators. But at the same time, banking organizations are actively working out strategies including consequences of the decree. The main points are compliance with the KYC (Know Your Customer) norms, anti money laundering laws and financing of terrorism.
We must understand that this decree is a regulatory act of the Republic of Belarus. How correspondent banks will react to Belarusian banks working with crypto residents of the High-Tech Park (especially those with strict cryptocurrency jurisdictions) - nobody knows.
- The decree specifies that deals on the purchase and sale of digital assets with the participation of residents of the Republic of Belarus be made only in Belarusian rubles. Tell us, how and by what criteria will the cryptocurrency be converted to Belarusian rubles?
- The conversion of cryptocurrency into fiat money and back will be done by cryptocurrency platforms, cryptocurrency exchange operators, but not banks. Banks will service current accounts of HTP crypto residents.
- In your opinion: how soon will blockchain be universally applied in Belarusian banks, and what has to change before it happens?
- Honestly - I don’t know. As of today, we do not have any real blockchain cases for Belarusian banks. Blockchain is used in transnational banks, which a huge number of employees and business lines all around the world, but Belarusian banks do not have it.
Using blockchain now, is not even a tribute to fashion, but an attempt to try the technology in as many tasks as possible. Majority of the issues can be perfectly solved without blockchain. And in the fields where it can be effective, there are no areas of bank responsibility, or they are secondary.
Blockchain should lead to an increase in the process efficiency. Transferring business to blockchain without a specific goal is just PR. I believe that banks should focus their efforts on tokenizing at least a part of banking products and services - that's the direction we need to choose.
- How will the decree affect attractiveness of Belarus for crypto business?
- Of course, it will affect it positively. Now, in my opinion, the main thing is to clearly define the rules of the game in this emerging market and make them transparent. It is also important not to allow a wave of fraud in the country.
We should understand that not only the HTP and banks, but the entire Republic of Belarus is putting its reputation at risk. Therefore, it is very important that HTP conduct a rigorous selection of crypto residents. Plus, they need to select banks, which in one way or another will serve the HTP crypto residents.
The decree is, without a doubt, a great achievement. But now it's important for it to really work and for success stories to appear. To achieve this, a large number of relevant bylaws are needed, which, in turn, must also work.
- What do you think about ICO?
- I have mixed feelings. The main problem with ICO is that, unlike classic crowdfunding, token sales do not pass even a minimal external expertise. There are no rules to this game. So there’s not much to choose from: you either believe the whitepaper and invest your cryptocurrency, or you do not believe and do not invest. Now the crypto community is already on the verge of developing some basic approaches to liquidating fraudulent ICOs. We’ll see how it turns out.
- Mario Draghi recently stated that European banks are not interested in cryptocurrency investments. How about the Belarusian banks?
- Considering the current cryptocurrency hyper volatility, investing in it is too risky for banks. Given the strict banking regulations around the world, I do not think that any bank seriously considers cryptocurrency as an investment tool. Only players of the risky investments market, which is not an area of banking activity, can afford investing in cryptocurrencies.
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