NSD Conducts Roundtable Discussion of Digital Financial Assets

03 December 2018
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National Settlement Depository (NSD), Russia’s central securities depository, has conducted a roundtable discussion “Digital Financial Assets and Blockchain Technologies as Instruments to Increase the Efficiency of Russia’s Financial System.”

The event was held in Moscow. Speakers included representatives of major Russian companies, leaders of the technological innovation sphere who were pioneers in conducting industrial operations using blockchain, as well as representatives of the market regulator and the Russian Ministry of Finance. Panel session participants discussed problems in implementing blockchain technologies, and elaborated practical recommendations for the digital assets market development.

The event had two parts: the first included reports made by major companies’ speakers, as well as specialists who promoted DLT and who were involved in legislative aspects of blockchain development.    Speakers from Sberbank, Soramitsu, and Bitfury Group shared their blockchain implementation cases, and described problems (including legislative ones) which the market and its players face these days. Experts on legal aspects of the new technology also actively participated in the first session: Elena Avakyan, Adviser, EPAM, and Ilya Kucherov, Deputy Director, Institute of Legislation and Comparative Law under the Government of the Russian Federation.

The second session was organized as a discussion, and its participants included Yana Pureskina, Director, Financial Policy Department, Russian Ministry of Finance; Ksenia Nefedova, Vice President, Finance and Development, Vnesheconombank; Anatoly Konkin, Head of the Project, FinTech Association; Elena Avakyan, Adviser, EPAM, and Sergey Ivlev, Co-founder, Lykke.  Artyom Duvanov, Director for Innovations, NSD, moderated the session.

Discussion participants agreed that the technology brought clear advantages to the market. However, it definitely requires legislative improvements and the determination of roles for all parties.

“Our task is to bring all participants to a unified agreement on a set of blockchain-related rules. Market players and the regulator should select terms and management mechanisms, including risk management and the roles of all parties; it will help guarantee high quality operations and let us integrate into the international processes,” said Alexey Lyashenko, Russian State Duma member, member of the State Duma’s Financial Market Committee. 

“At NSD, we believe that blockchain will help us change automation systems in financial markets, since this technology allows us to enter a new cost reduction phase, and this is an instrument for competition.  Those who will be the first users of this technology will have a competitive advantage. The digital economy needs a new class of assets - crypto currencies.  They have new features, in particular, higher liquidity. They do not look like securities, and they exist only in distributed ledgers,” added Artyom Duvanov, Director for Innovations, NSD, commenting on the importance of the meeting.    

Speaking about the bill on digital financial assets, Yana Pureskina, Director, Financial Policy Department, Russian Ministry of Finance, reminded that the revision of the document before the second reading was held by the State Duma’s Financial Market Committee. “Initially, we saw the goal of the bill to be regulating the issue of more easily attraction of funds, primarily for risky venture projects for small and mid-sized companies. The concept of the ICO prevailed in the text of the bill presented to the State Duma and adopted on first reading; it assumed the opportunity for a qualified audience of investors to raise funds using an alternative to listing and bank loans which often are unavailable for startups due to their complexity, high costs, and expensive resources.  We consider this regulation as a great opportunity for the market.”

Ksenia Nefedova, Vice President, Finance and Development, Vnesheconombank, outlined options for the practical use of blockchain in securities transactions. She pointed out that this technology offered participants a significant advantage: blockchain will allow them to draw up lists of security holders in a shorter period of time, and this will let assess investors’ needs in a more flexible way, taking into account investors’ profiles, and to develop product solutions based on this information. 

Sergey Ivlev, Co-founder, Lykke, spoke about the convergence of traditional and crypto assets: “New innovative technologies are born in an experimental non-regulated environment. However, to achieve customers, they need to go that one “last mile” and integrate into the existing infrastructure.  Now we see that crypto companies step by step accept the regulations, on the one hand, and that major traditional institutional players enter the crypto markets, on the other hand.”  

Anatoly Konkin, Head of the Project, FinTech Association, shared his experience in dealing with different projects that were tested in the regulatory sandbox.  In his opinion, the regulatory sandbox will allow for the synchronization of technologies with the dynamics of regulatory changes.

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