Head of Russia's Largest Bank Backs Bitcoin, Again

Sberbank may not be a household name in the west, but it just happens to be the third-largest bank in Europe.

It's also the biggest bank in Russia and Eastern Europe, with nearly half a trillion dollars in assets and a workforce of 300,000.

The bank is owned by the Central Bank of Russia and it is headed by German Gref, who served as the Russian Minister of Economic and Trade from 2000 to 2007. Gref’s tenure was marked by a period of economic reform and liberalization. Judging by his recent statements, he is still open minded when it comes to monetary issues.

This news follows comments Gref made about the currency back in December. Speaking in an interview at the sidelines of the World Economic Forum in Davos, Gref voiced his support for digital currencies.

He added that he had already made his opinion heard in government circles, by sending letters to the central bank, the finance ministry and to the very top, the Kremlin. In the letters, Gref asked officials to intervene with parliament in order to avert any bans against digital currencies, reports Bloomberg.

He said an outright ban would be a “colossal mistake", adding: “It definitely shouldn’t be banned, it must be studied and maybe regulated properly".

Although Gref sees an opportunity in digital currencies, many fellow bankers would beg to differ. JPMorgan Chase CEO Jamie Dimon told reporters at Davos that the rise of bitcoin will prompt governments to clamp down and treat it like any other payment system.

VTB Group

is Russia’s second-largest lender and its CEO Anrei Kostin doesn’t share Gref’s enthusiasm, either. He described digital currencies as “quite dangerous” for the money market and stated that VTB Group doesn't plan on getting involved.

Last week, a set of amendments introduced in the Russian parliament caused a fair amount of FUD (fear, uncertainty and doubt) in the bitcoin community, as it was misinterpreted as potential bitcoin ban. Russian regulators are of course keeping a close eye on digital currencies, as are their counterparts across the world. However, they have not taken any noteworthy action against the proliferation of digital currencies in Russia.

President of the Russian Electronic Money Association Viktor Dostov told Bloomberg that it is still unclear how Russia would regulate digital currencies. He stated that the only point of control would be an exchange centre where bitcoins would be traded for money. However, we are not sure whether Dostov is advocating the creation of a centralised exchange on a national level, or simply referring to independent bitcoin exchanges. It is a case of lost in translation.

In any case, Gref’s statements should go a long way toward reassuring bitcoin investors and enthusiasts in Russia and CIS member states for that matter.

It is also interesting to note that in a recent interview with CNN, Russian Prime Minister Dmitry Medvedev admitted the country’s economy is slowing down, but pointed out that his government is gradually transforming Russia into a knowledge-based economy and introducing 21st century technology into various industries.

Whether or not Russia is ready to embrace 21st century payment systems and alternative currencies remains to be seen.