The key issue is the lack of strict legal mechanisms.
The Kommersant daily newspaper has learned that National Settlement Depository (NSD), the Central Securities Depository (CSD) of the Moscow Exchange, intends to create a platform to handle digital assets. It has plans to implement a project to develop a suite of blockchain-based services and a 'bridge' between digital assets and the payment system. Experts believe that NSD seeks to carve a niche by working for the long run, as the current holdings of cryptocurrencies owned by Russian legal entities are insignificant.
The country's largest recordkeeping institution, National Settlement Depository, is developing a blockchain platform project for comprehensive servicing of digital assets (both tokenized and cryptocurrency ones). This was reported to the newspaper by sources in the FinTech industry. NSD has confirmed its interest in the project. "NSD, together with market players, is merely exploring the prospects of this trend in light of the regulatory initiatives. In our view, the securities market technologies have prospects of being used to record crypto assets", said NSD's spokesperson. According to the Kommersant source, the project is intended to create a platform supporting digital assets accounting (based on token ownership certification) and settlement, and storing private keys for cryptocurrencies and identifying cryptocurrency wallet owners. Furthermore, according to the source familiar with the details of the project, it is likely that a crypto assets assessment service will be created relying on market data received from the world's major cryptocurrency exchanges. From the technology perspective, the blockchain platform will be comprised of a suite of services and the so-called 'bridge' linking crypto assets and the payment system for fiat currencies. NSD declined to comment saying that "it is still premature to discuss any specific plans".
According to the Kommersant's sources in the FinTech industry, the technical part of the project will be developed by WAVES Platform. This has been confirmed by WAVES Platform's founder and CEO Alexander Ivanov who says that the company has already started developing the prototype. The company expects to present the first results of its development as early as in September 2017. "From the technical viewpoint, this project is not difficult to implement. It is much more complicated from the conceptual and organisational viewpoints" said Mr Ivanov. The key problem, in his view, is the lack of strict legal mechanisms which support the handling of digital assets. That is exactly the reason why NSD is so cautious about its plans. "We are expecting amendment of the laws relating to crypto assets in order to minimise the risk of owning such assets," said the CSD's spokesperson.
According to the estimates of FinTech industry experts, the technical part of the project will cost around $200,000. Mr Igor Khmel, the founder of FinTech startup BankEx.co, believes it is likely that a project like this and a player like NSD will not need to incur any marketing and promotion costs at all. "NSD is part of the consortium of the world's largest CSDs. Some of them may fit in with the protocol being developed by NSD", he continued. "This may lead to a gradual amendment of laws in different jurisdictions and create new channels for cross-border fiat-cryptocurrency transfers and capital mobility".
From the viewpoint of demand for such services, so far there are more questions than answers. According to Igor Khmel, the global volume of asset classes which cannot be digitised using the existing banking technologies and require more subtle, "ad-hoc" technologies (like derivatives for rail freight capacity, carbon and lithium, credit liabilities and assets of small businesses, etc.) could be valued at $10 trillion. According to Dmitry Galperin, Investment Director at Runa Capital, Russia accounts for about one tenth of all global cryptocurrency holdings (ca. $10 billion). However, he believes that Russian legal entities own the smallest share of this volume. According to Mr Galperin, NSD's project targets long term rather than the current market. "Currently, the key interested parties are banks and financial organisations which want to experiment with the technology", he added. NSD's spokesperson has confirmed the demand from professional participants of the securities market. "Development of the infrastructure is important for forming a civilised market and for offering a wide range of investors, issuers, and professional market participants efficient and safe processing of transactions in this new type of assets", said the CSD's spokesperson.
Maria Sarycheva