Home News First full-cycle blockchain deal with bonds was conducted in Russia

First full-cycle blockchain deal with bonds was conducted in Russia

On May 8, mobile operator MTS and Sberbank CIB (Sberbank’s affiliate) closed a deal on the commercial bonds placement through the use of smart contracts. The blockchain platform underlying the transactions was that maintained by the National Settlement Depository (NSD). This was the first blockchain-based full cycle transaction conducted in Russia.

MTS had placed $ 12 000 000 worth of bonds on blockchain for a half-year period. The purpose of the bonds placement was to “provide the experimental proof for the advantages of this format over more traditional means of bonds placement”.

“Our goal is to scale the technology, so that it could fit with various types of financial transactions and processes. This may be possible only given the existence of the established legal framework, however,” – the Managing Director of NSD Denis Buryakov explained.

MTS envisages further development along these lines in order to be able to apply the experience of using this technology to financial markets.

Back in October 2017, “Megafon”, another Russian mobile operator, conducted the blockchain-based bonds placement with Raiffeisenbank. In that case blockchain was used only for transferring bonds, however, with all money settlements being conducted through more traditional means.

“Now we were able to carry out the whole of the business process on blockchain,” – Sergei Putyatinsky, the IT-Director at NSD, explained to “Kommersant”.

This time, the technical aspects of the deal involved the use of 4 smart contracts, whereas the fifth one will ensure the redemption of bonds payable in half a year. According to NSD, the use of smart contracts will cut the technical costs by 5 to 10 percent. NSD expects other companies and organizations to join the system.