Following a successful Bank of Russia blockchain pilot using its sandbox, the central bank has given the green light to a Norilsk Nickel (NorNickel) digital asset tokenization platform. The approval is subject to the new federal law “On Digital Financial Assets” coming into force. Currently, Russian legislation requires digital platforms like this to be operated by banks and exchanges.
“Based on the results of the piloting, the Bank of Russia proposed to include in the draft federal law ‘On Digital Financial Assets’ the provisions necessary for the introduction and development of such decisions in the emerging digital assets market,” said Ivan Zimin, Director of the Bank of Russia Financial Technologies Department.
Norilsk Nickel is the world’s largest palladium producer and a significant producer of nickel, platinum and copper.
The metals producer plans to tokenize a wide range of assets, including commodities such as gold, palladium, gas and oil. It refers to them as Asset-Backed Coins (ABC tokens). A commodities trader can buy tokens and the tokens could be converted into the physical metal or traded.
“The issuance of hybrid tokens on the blockchain platform, combining several types of digital rights at once, is a very flexible tool that will open up new business financing opportunities and expand investors’ access to promising financial instruments,” said Zimin.
Apart from commodities, other assets such as contractual rights, financial instruments and real estate could be tokenized on the platform and any company could issue them.
The commodities company plans to operate the tokenization platform and said it would ensure the “functioning of the token and derivative market”. It stated that all users would have to be identified in compliance with laws.
In December, Bloomberg reported the platform had been tested by commodities traders Trafigura as well as Traxys and Umicore. Billionaire CEO Vladimir Potanin estimated that as much as 20% of the company’s metals could be tokenized within two years.
The platform is based on the enterprise blockchain Hyperledger Fabric, and Norilsk Nickel is a Hyperledger member.
The commodities sector has taken a particular interest in blockchain, both for operational efficiencies as well as for tokenization. Commodities trader Mercuria is starting a $100 million investment fund. It’s part of the metals post-trade consortium ForceField, which includes AngloAmerian, is involved in the Vakt oil post-trade platform and invested in komgo the commodities trade finance solution.
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