De-Dollarization & Disintermediation - Russian Mobile Phone Operator Issues First Blockchain-Backed Bond

Tyler Durden's picture

Authored by Tom Luongo via Gold, Goats, & Guns blog,

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)

Image Source: CoinTelegraph

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.

Get to know it and embrace how it will drive out old transmission loss out of finance and other sectors of the economy.

And now this is why all of this is so important. As I said when we first heard of this plan back in August:

The better plan is to loosen central bank policy, issue some ruble-denominated debt (or yuan) while building up the crypto infrastructure to absorb those capital flows without creating dislocations within the ruble market.

This creates a more natural and organic flow of capital into the country without it causing social upheaval. Like the announcement of Russian Miner Coin, this move by the NSD is just another building block in the foundation of a more resilient Russian financial system to better coordinate the flow of capital and smooth the development of the chain of production.

This, in turn, limits the effects of U.S. sanctions. Once the market comes to the conclusion that Russia treats capital better than the U.S. does, the current trickle will become a torrent. And Russia has to be ready to handle this.

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.

This is the kind of news that sits below the headlines but has enormous long-term effects. If this test is successful then expect larger issues in the near future, allowing Russia to prove to the market that the rules have changed and it is capable of providing investors with security along with the potential for great returns on their money.

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.

Capital flows to where it is treated best. ALWAYS.

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VD's picture

oh boy, here we go again....

38BWD22's picture

 

 

I would NOT be confident investing in Russian or Chinese state cryptobonds.

El Vaquero's picture

Most certainly not, but I would NOT be happy if this works if I were a TBTF either.  

YUNOSELL's picture

That's Gold, Jerry!! Gold!!

Chupacabra-322's picture

Decentralization.

Decentralize from Criminal Fraud Economic System of Debt, Bondage & Enslavement.

Decentralize from the Borg.

Mtnrunnr's picture

yes but cyrpto currency relies on the internet which is literally the most centralized system every created on the planet. furthermore if you think the Russians are actually interested in relinquishing power you are out of your mind.

tmosley's picture

>The internet

>Centrilized

I came here to laugh at you.

ergatz's picture

De-dollarization!!! Why not.

The US$ is DEAD. http://wp.me/p4OZ4v-2GY

LightBulb18's picture

Think of it as A concept that probably has usefulness to the forces that currently exist. We know there is A force attempting to establish A world government, and either A resistance, A possible monkey wrench, and A need for A switzerland out there. All of which bode well for A crypto currency of some sort possibly being useful for A time. Heck you can even look at it as our gangs currency, if you wealthy why not hedge your bets. Pretenses have value, traditional assets aren't what they used to be. In G-d I trust.

Lumberjack's picture

Is this the real reason for all the sanctions? It very well could be.

dasein211's picture

And that’s why Russia and China give a fuck anymore.

07564111's picture

I thought that bearings rolled with the times ? Apparently they prefer to stay lodged in the cracks of the past, who would have thought they were just shills.

I've said it before and I say it again..The US and the "West" are dead men walking.

#russwinning

Economy-X's picture

"Capital flows to where it is treated best". Wrong! Caital flows to places where the owners of capital know it remains secure. Just ask former billionaire and political opponent to Putin, Mikhail Khordorkovsky, about how secure capital is in Russia.

Khordorkovsky had all his capital confiscated for simply being political. So yes, send your capital to Russia. But just make sure your willing to kow tow to Putin in the process.

Capital flows to where the rule of law, especially property laws are strong and independent of political authority

07564111's picture

The bolshevik got less than he deserved..sux to be juice.

Consuelo's picture

 

 

"Capital flows to where the rule of law, especially property laws are strong and independent of political authority"

How does your statement differ from 'Capital flows to where it is treated best'...?

Lumberjack's picture

The banks are salivating all over this. It is new, seems to work well and they see it is unregulated. They want it and they'll get it. The rules are being written as we speak.

It was a nice little cottage industry while it lasted for some.

Volkodav's picture

      khordo was frontman of high plan for massive loot, take control Russia (again)

      these shut away many Russians from their only income source

      and many died, pensioners and especially in far north where

      only whole city is single large employer ended asset stripped and shut

 

 

cat2005's picture

I don't see why "secure" couldn't be part of the "best treated" definition.

Justin Case's picture

Khordorkovsky had all his capital confiscated

He stole it in the first place from Gov't coffers. Putin made a deal with him, that if he keeps out of politics, he will let him keep what he stole. Khordorkovsky was being backed by mericans and wanted to run for president against Putin and that broke the deal between Putin and Khordorkovsky, whom by the way was being groomed by the mericans and CIA working with him. Once elected they could rape Russian resourses oil and gas.

Truth is a bitch,

Sirius Wonderblast's picture

"Capital flows to where the rule of law, especially property laws are strong and independent of political authority"

May be the former, sure never the latter.

SILVERGEDDON's picture

Well, shit. Even Las Vegas couldn't keep the crypto stories buried for a full week. 

Back to the stoopid digital skittle shitting rainbow unicorn bux story line. 

And, this time, it WAS the Russians who did it. Really.  

Mustafa Kemal's picture

"I would NOT be confident investing in Russian or Chinese state cryptobonds."

I will. Russia is thinking ahead and creating a multipolar cooperative world. THey are developing blockchain infrastructure and we are arguing over abortion and gender identity politics. That and silencer bills because of Vegas shooting.

Quantum Bunk's picture

Why not ? Numb nuts ?

China is the biggest creditor in the world.

Russia has more FX reserves now than it did before oil crash and sanctions. Has more gold now than ever.

Raffie's picture

You best get to Russia and tell them you think you're so much smarter then they are and fix their mindset on cryptos and blockchain.

dasein211's picture

Seriously. Do people not get the fact that theyll be able to buy stock and bonds DIRECTLY from the issuer? No middle man. No fees. It’s a true capitalists wet dream!!! This is what the blockchain can do!! Imagine they setup payments to you just like a borrower is supposed to and you can cash out anytime you want. This. Is. The. Future.

VD's picture

yes that part is fine, it's all the ICO's and bitcoin itself that are going to blow up. basically, blockchain is simply a superior clearing tech, not a coin generating currency, not in the long run.

RedBaron616's picture

Until your bitcoins are stolen and then there is no recovery. Don't bother filing a police report. You will never see them again. Just the kind of investment I want to put a lot of money into. Not.

VD's picture

yeah, your limited understanding of how this is early stages of blow off phase which my comment is addressing vs the legitimacy of blockchain as simple tech rather than "coin" this and "coin" that. the russians are throwing out trial balloons. perhaps that spells it out for you.

 

& plowing resources into blockchain when blockweave is superior also further drives my point home, assuming you understood.

Consuelo's picture

 

 

You know what though - the article has merit as to the Russian way of disarming the bully.

 

 

FreeShitter's picture

Yep here we go.. Always can count on your expertise with all the years of trading BTC!

Raffie's picture

VD sure does a have a wild imagination and no one can take that away from him. LOL

RedBaron616's picture

Since when does trading something that swings as wildly as BTC make someone an expert? All it means is you are a gambler, no more. Might as well trade penny stocks or buy lottery tickets.

FreeShitter's picture

Well since you showed up, tell me more about that BTC phone hack ...im intrigued,

DontWorry's picture

If its pulbished in the Gold, Goats and Guns blog you know its accurate.

 

HRClinton's picture

Disin...what?

I favor Disembowelment of (((Global-Lust Banksters))).

The 'outcome' of which is to be applied in a compounding fashion around the necks of all financial tyrants and (((parasites))).

peddling-fiction's picture

Blockchain backed bond: smart idea.

NotApplicable's picture

Better yet, they beat Blythe into this space.

peopledontwanttruth's picture

We've watched this for years and all ZHers asking how long, how long, how much longer?

It will all come to fruition in a day and what will unfold no one will be ready for.

dasein211's picture

They are so not ready.... but it’s coming.

NoWayJose's picture

I commented this morning on someone who suggested that the US will need a second currency. I chuckled and said - sure, as long as it was backed by BitCoin. Who knew it would be ‘real’!

my new username's picture

Capital flows to where it gets a great return with minimal risk.
There are few places where the return is good.

Herdee's picture

Anything gold backed is the enemy of corrupt Wall Street and their Banking minions.

historian40's picture

So, the ones running the dollar scam haven't been stockpiling gold for centuries, and they didn't manipulate countries and control governments under the gold standard before?  Gold isn't a magic bullet, and neither is "blockchain".

Son of Captain Nemo's picture

Like the Yids that control RT (https://southfront.org/russian-media-outlets-part-u-s-psyops/) and the Elvira Nabiullina(s) in their banks... BEWARE THE "BLOCKCHAIN"!...

Unless of course you are GUARANTEED by it's maker that it is indeed "backed" by PM!!!!