Image by Jeffrey Beall via License: Creative Commons

A major bank in Russia is tokenizing diamonds on a Russian financial industry blockchain. The country’s institutes are also remarkably progressive when it comes to blockchain.

With 600 million carats, Russia has the world’s largest diamond reserves. Now one of the country’s largest banks has offered diamonds as tokens for the first time.

Expobank issued 5,000 tokens for a 3-carat diamond valued at 9 million rubles – $97,500. Each token is worth just under $20. They were sold to accredited investors and will be triggered at market price in November 2026.

The tokenized diamonds are intended to democratize diamonds as an investment. So far, diamonds have been a privilege of the wealthy, as entry starts at around $20,000. Diamonds are also interesting for Russian investors, comments Vakery Enakyabow, a Russian stock market expert, “because they are valued in dollars, and so you are at least protected against the devaluation of the ruble.”

According to English reports, the bank uses the Multichain Blockchain as technology. If you machine-translate one of the sources, a report from the business magazine “Vedomosti”, you end up with “Masterchain”, which corresponds more closely to the Cyrillic “Мастерчейн” in the text.

If I understand it correctly, Masterchain is a blockchain project initiated by the Russian Central Bank in 2016, which started as a closed fork of Ethereum, possibly based on “Ethereum Enterprise”. Numerous important banks took part in the initial tests. Even though there are relatively few reports about Masterchain in the non-Russian media, the project appears to be continuing successfully.

In 2020, the large VTB issued a guarantee for almost 400 million rubles as a token on the Masterchain, and in March 2023 the Moscow Credit Bank denominated such a tokenized guarantee in Chinese yuan. These guarantees are used primarily in wholesale and long-distance trade.

Masterchain is also a central bank independent company that operates the blockchain. Like numerous other financial institutions, it was given the right by the central bank to issue and manage “digital financial assets” (DFA).

DFAs are arguably the Russian equivalent of “crypto securities” and “crypto assets”. Companies can issue such DFAs via a Masterchain platform. In the third quarter of 2023 alone, more than 80 new tokens were created, usually by financial institutions such as Sberbank or Eurofinance Mosnarbank, the Saint Petersburg Stock Exchange, Masterchain and other blockchain platforms. So far, the DFAs have only been traded on a Moscow stock exchange.

It is not entirely trivial to reconstruct the facts from machine-translated Russian articles from Forklog, for example. But overall, everything points to a very lively and, above all, constructive blockchain ecosystem in Russian finance.

Geopolitically, this is exciting. By tokenizing the financial infrastructure, Russia can significantly simplify international trade with China and other “friendly” states. The sanctions could become a driver for the construction of a new, more modern, leaner, more powerful financial infrastructure.


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