For months now Russia has been moving into the blockchain space in a serious way. I’ve talked about these moves in previous articles(here, here and yes, even here)
But, the latest news is one that should have every one stand up and take notice.
Russian Mobile phone operator, Megafon, issued RUB500 million in zero-coupon blockchain-based bonds recently. This was purely a proof of concept issuance.
But, it speaks to the bigger picture of bypassing traditional book runners, i.e. the major banks, for selling securities to investors. No longer does Goldman Sachs, Standard Charted, HSBC and Deutsche Bank have a stranglehold on how capital is raised for emerging markets.
Moreover, it will prove just how much of an advantage the blockchain has over these older and much more expensive business models.
This reduces the cost of a bond issuance to practically nothing, beyond the needed legal work.
These bonds can and will be sold without the need for the middle man to take a huge cut.
The blockchain is changing everything.
This news also puts paid the news from a couple of months back that the National Settlement Depository is moving, via the WAVES platform, to token-ize as much of the Russian economy as it can. This is your first example of their integrating with the Moscow Exchange to trade securities via the blockchain.
This drives another comparative advantage for companies looking to raise capital, listing fees and access to market makers, which are also being squeezed out of the market.
The term is disintermediation.
And now this is why all of this is so important. As I said when we first heard of this plan back in August:
These are the reasons why the U.S. is so angry with Putin and Russia. They are building infrastructure which attacks the foundations of U.S. financial and geopolitical power. And they are doing it the Russian way, by deploying capital like a scalpel, not a sledgehammer.
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That’s the key, folks… confidence. Russia and China are working to increase investor confidence while the U.S. and EU are punishing investors because it is a privilege to use the dollar and/or the euro.
