Russia’s state-owned bank, VTB, sealed a major deal with digital financial assets, addressing its issuance and placement through its subsidiary. Based on the published report, this is the first of such deals for VTB Factoring. The Russian lender regards it as a cash-back transaction.
Tokenizing Metrowagonmash’s Commercial Debt
A part of the deal included the tokenization of an engineering company, Metrowagonmash’s commercial debt. Fintech firm Lighthouse issued the tokenized debt on its operating system. This is because not all fintech or financial companies are capable of performing this operation. Lighthouse and Sberbank are the only two licensed organisations.
After the tokenization, VTB Factoring took over the deal completely. The subsidiary bank made a comparison between the tokenized deal and short-term commercial loans. In such short-term commercial loans, monetary claims pose as collateral.
This time around, the number of protocols and contributors is drastically reduced due to the use of digital assets. In turn, this positively influences the company as the cost of issuing the company also decreases.
Additionally, companies benefit from this commercial debt tokenization in terms of the time taken to receive aid. Unlike without tokenization, a shorter time passes before companies receive financial support at a low interest or transaction rate.
Digital Assets Impacts Positively on the Deal
Meanwhile, continuous advancement in various sectors with the use of blockchain technology is obvious in Russia. The country barely started considering the regulation and legalization of cryptocurrency less than a year ago.
Thereafter, the government of Russia considered the legalization of mining crypto in the country. Russia has now greatly advanced in its blockchain functionalities. The current deal between the Russian state-owned bank and the fintech company on the blockchain comes with its benefits.
Investors and issuers are assured of the immutability of data through the use of crypto algorithm. Network Validators in their allotment are available to support the algorithm in achieving immutability.
All the operations are transparent and easily traceable. Performance of automatic transactions are permitted. Also, is the provision of a highly reliable and trusted environment for the users.
Both partners expressed enthusiasm towards the deal. Anton Musatov, CEO of VTB Factoring asserts that this deal will open a new digital market in Russia. While Denis Jordanidi, Lighthouse CEO said the deal will,
“lay the foundation for an innovative business practice for working with borrowed capital for many interested companies in Russia”