Russia’s largest exchange group has announced plans to trade cryptocurrencies on the Moscow Exchange.
Russia is diversifying into blockchain technology and building up its crypto infrastructure to absorb anticipated capital flows from turbulent Western markets.
The central depository fo Moscow Exchange, National Settlement Depository (NSD) is developing a ‘blockchain’ platform to provide accounting services for digital assets and cryptocurrencies.
They will be integrated into the banking system to stand beside stocks, bonds and other derivative assets.
Russia plans to do this by the end of 2018 without creating dislocations within the ruble market.
It is in direct response to new US sanctions.
Russia Insider reports:
The platform looks to be build a unit of account, very important in the volatile crypto-space, for people to value their assets in and have access to through a wallet platform.
In short, the Moscow Exchange is taking a page out of Dan Larimer’s BitShares and its OpenLedger exchange to provide trading and accounting and banking services all validated and accessible through the blockchain.
In essence, by the end of 2018, cryptos will be trading on the Moscow Exchange and integrated into the banking system to stand beside stocks, bonds and other derivative assets.
CEO Eddie Astanin:
“Our goal is to create a secure and user-friendly accounting infrastructure for digital assets. We consider the platform would not only provide technological and legal protection of all parties involved, but also extend variety of post-trade services for investors, custodians and new institutions emerging in this sector of economy.”
Building Blockchains off the Putin/Buterin Meeting
This is yet another example of Russia’s rapid response to the changing environment of cryptos. Vladimir Putin’s meeting with Ethereum designer, Vitalik Buterin, in May at the St. Petersburg International Economic Forum must have been truly eye-opening for Putin.
Since then I can almost not keep up with the news flow coming out of Russia relative to the widespread adoption of the blockchain to rapidly modernize those areas of its economy that need it in order to compete over the next generation or two.
Putin, ever the long-game strategist, must have had a ‘eureka’ moment talking with Buterin about Ethereum for people close to the Kremlin to be reacting this quickly.
And the news this morning that Buterin is working on the fix for Ethereum’s scaling issues is welcome news on this front as well.
Blockchains as Sanctions Defense
But this goes deeper than just banking modernization, which is a priority for the Russian government. These moves into crypto are direct responses to the new sanctions placed on Russia by the U.S.
These are moves to make Russia a diversified destination for capital fleeing the chaos of the Western political breakdown that we are watching unfold before our eyes in real time.
There has been a lot of smoke about Russia (and China) backing their national currencies with Gold. And, while as a gold bug, I appreciate this sentiment I also understand that Russia couldn’t do that in this environment without creating insane capital flow issues in the current environment.
The better plan is to loosen central bank policy, issue some ruble-denominated debt (or yuan) while building up the crypto infrastructure to absorb those capital flows without creating dislocations within the ruble market.
This creates a more natural and organic flow of capital into the country without it causing social upheaval. Like the announcement of Russian Miner Coin, his move by the NSD is just another building block in the foundation of a more resilient Russian financial system to better coordinate the flow of capital and smooth the development of the chain of production.
This, in turn, limits the effects of U.S. sanctions. Once the market comes to the conclusion that Russia treats capital better than the U.S. does, the current trickle will become a torrent. And Russia has to be ready to handle this.
Diversifying into the blockchain is one of those important avenues.
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