Elman Mekhtiyev, executive VP of the Russian Banking Association, believes that implementing blockchain in processes that are already working fine makes little sense. According to Mekhtiyev, it’s too early to say the technology would prevail until there is a particular case where blockchain is better than centralized solutions.
Mekhtiyev believes that the Russian regulator, similar to central banks in other countries, has realized that it would fall out of the legal terrain if it fails to regulate some technologies. In that case, the technologies will find their use in criminal actions, which could result in big trouble.
Interviewed by Finversia, he also mused on bitcoin and its underlying technology.
“First, not only the Central Bank, but all monetary authorities were against using cryptocurrencies. Second, when they found out that bitcoins were, in fact, just a tip of an iceberg, just a part of technologies used for their ‘production’ and distribution, the Bank of Russia realized the market would use the technology anyway, but with unpredictable consequences,” Mekhtiyev said.
The regulator has already formed a pool of banks interested in blockchain technology. Mekhtiyev believes that they will soon find a form of cooperation.
“It would hardly be a non-profit partnership. Most likely, it’ll be a specialized association,” he said.
Still, Mekhtiyev believes that there is too much fuss around blockchain.
“The experience of the National Settlement Depository that implemented the technology to calculate votes in joint stock companies (which is very important for minority shareholders) proves that implementing blockchain in processes that already work fine is senseless. What I mean is until there is a particular case when centralized data storage fails and blockchain succeeds, it’s too early to talk about any domination of the technology,” Mekhtiyev said.
He was also quite skeptical about initiatives concerning creation of bank and regulatory ‘sandboxes’ that could solve the problem with blockchain applicability among other things.
“When we talk about ‘regulatory sandbox’, it means that there are some exclusions from the law for some particular ‘chosen ones.’ I don’t understand how could they make an exclusion for a couple of companies that could make money using their preferential position. How do we decide who’s worthy and who’s not? This is being actively discussed, for example, when it comes to remote identification. The Federal Law No. 115 contains provisions that impede certain processes, so people say let’s cancel them for a while. I’m not against progress, I just don’t understand what this ‘for a while’ thing means,” Mekhtiyev added.
Earlier, the head of the Russian Central Bank Elvira Nabiullina said that development of financial technologies poses challenges to the regulator, and that it will have to change the ideology of regulation.
Also. as ForkLog reported, Russia’s biggest banks have run a series of test transactions using an Ethereum-based blockchain prototype developed by Cinimex.