A prominent Russian bank, VTB Bank, has launched ATMs for digital ruble holders to instantly convert their digital rubles to banknotes, as reported by local news outlet Izvestia.
This solution — unveiled at the Finopolis 2023 fintech forum — allows ATMs to process real-time "withdrawal"-type cash conversion system for digital rubles. For now, VTB offers this service to select online banking clients at 14,000 ATMs across Russia.
"The launch of tech that lets people withdraw digital rubles from ATMs is a big step in this direction. It will make the process of working with [the CBDC] clearer, more convenient, and simpler," said Georgy Gorshkov, deputy president and CEO of VTB.
VTB said the solution is "instantaneous and seamless," using a bridge system to transfer central bank digital currency (CBDC) holdings from digital wallets to "non-cash rubles." Then, the digital rubles in non-cash form can be easily converted and withdrawn as cash from conventional bank accounts.
Similar ATM mechanism
VTB's ATM cash conversion system for digital rubles is similar to Bitcoin ATMs. Bitcoin ATMs facilitate the purchase of Bitcoin by exchanging traditional currency, although holders need to own a separate cryptocurrency wallet. Once the amount of cash a holder wants to trade is inserted into the ATM, they can enter the wallet's address to send the token to their digital wallet.
Some Bitcoin ATMs allow two-way transactions, meaning holders can buy and sell Bitcoin. Holders can enter the amount of Bitcoin they want to sell to receive cash or deposit it onto their debit card.
Developments in digital ruble program
This development is part of Russia's central bank pilot digital ruble program, officially launched on August 1, 2023. The plan is to extend this initiative to all Russians for international transactions by early 2025.
Around 600 people in 11 cities, including Moscow and Yekaterinburg, are participating in the pilot program. The Russian central bank will expand the program early next year to allow more people to try the digital currency.
In addition to VTB, 12 other banks participate in Russia's digital ruble pilot. Sixteen more banks are scheduled to join next year, including the megabank Sberbank and several regional banks, similar to China's approach with its digital yuan project.
"The banks that are taking part in the pilot are testing [the digital ruble] in their real operations. After this, [the Central Bank] will release the coin into mass circulation," Gorshkov said.
"But in order to make it understandable for users, we need to prepare the entire infrastructure in advance."
Olga Skorobogatova, first deputy chair of the central bank, said citizens had used the digital currency to make "several thousand transactions."
The conversion of digital rubles to physical cash is free of additional costs for private individuals. However, businesses and companies using the service will incur a 0.3 percent commission fee.
Offering the digital ruble conversion service for individuals at no cost could boost participation in the pilot program, enhancing the appeal of the CBDC for daily financial transactions.
The central bank is also considering using the digital ruble for international transactions to distance itself from the SWIFT banking platform. A proposed bill that permits foreign banks and credit institutions to use digital ruble wallets is currently underway. If approved, the bill is slated to take effect on January 1, 2024.
While the proposed bill could pave the way for international banks to adopt Russia's CBDC, Crypto News reported it is unlikely the coin will be used in cross-border transactions soon. Technical details still need work, and the necessary protocols are not expected to be established before early 2025.