Russian Bank Issued a Loan Secured by Cryptocurrency Collateral
Kataryna Kovtun August 19, 2020
Table of Contents [hide]
- 1 For the first time in the Russian market, a borrower was able to attract a loan from a bank secured by cryptocurrency collateral.
- 1.1 Expobank is the lender.
- 1.2 Will cryptocurrency collateral become common practice in Russia?
For the first time in the Russian market, a borrower was able to attract a loan from a bank secured by cryptocurrency collateral.
Expobank is the lender.
According to some lawyers, such a loan agreement opens the door to widespread recognition of cryptocurrency as a class of safe assets. However, the law on the regulation of relations in this area will come into force only from January next year. Read more here.
Therefore, it is too early to talk about the large-scale use of tokens for collateral when applying for loans in banks.
Tanzila Yandieva, who heads the legal department of Expobank, told reporters that an individual bank loan agreement was signed with the borrower. The financial institution accepted Waves tokens as collateral.
The loan was received by businessman Mikhail Uspensky. He noted that he does not abandon plans to use Waves cryptocurrency. However, tokens should not be allowed to simply lie idle in his wallet. As a result, they decided to receive funds to expand their business with the help of these virtual coins.
Yuri Brisov, accompanying the transaction, said that a notary was present at the signing of the agreement, who secured the procedure for transferring the cryptocurrency under the control of Expobank.
Brisov also added that Waves can be freely used on the territory of our country, no restrictions are imposed on operations with this cryptocurrency.
Will cryptocurrency collateral become common practice in Russia?
Securing a loan with tokens is a good precedent. However, this does not mean that it makes sense for crypto enthusiasts now to go to banks for loans secured by cryptocurrencies, says Dmitry Zakharov, CEO of Moscow Digital School. He doubts that in reality, such transactions will become common practice.
“Cryptocurrency for banks is a high-risk asset, both due to the lack of clear legal regulation and due to their high volatility. It would be interesting for me to look at the situation if Mikhail Uspensky still cannot repay the loan. How will the bank continue to sell the pledged item?” Zakharov asked.
He added that in Russia, civil legislation is built on the principle: everything that is not prohibited is allowed. Cryptocurrencies have a certain value, they are the subject of circulation on exchanges, are not prohibited in the country, therefore they can be property. The completed transaction is another confirmation of this logic.