Moscow Stock Exchange seeks to allow trading of digital assets on behalf of central bank under proposed bill

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The Moscow Stock Exchange (MOEX) has announced its intention to work on a draft law allowing it to trade in digital financial assets (DFAs) and bid-based securities. Vedomosti local publication reported that the exchange operator is also seeking to “allow custodians to issue receipts for DFAs” which will function as securities.

MOEX Chairman Sergey Shvetsov told reporters at a symposium that in addition to issuing receipts, the institution will enter the digital asset markets by launching its own financial products based on distributed ledger technology ( DLT).

“We want the market to make its own choice, blockchain accounting or custodian accounting, and if the law passes, Russian custodians will be able to accumulate DFAs on their blockchain accounts,” Shvetsov said. “As soon as the client needs the underlying asset, he will cash the receipt in his account in the blockchain to receive the asset.”

The MOEX is drafting the bill on behalf of Russia’s Central Bank, confirming speculation that the move has the approval of the country’s highest echelon of regulators. The central bank does not have the legislative support to introduce new bills, but Shvetsov says key officials are reviewing the bill.

The switch to the exchange to trade DFAs has been underway for some time, with Anatoly Aksakov, head of the Russian Banking Association, suggesting that the MOEX is shifting towards digital asset trading. Aksakov noted that the institution “will do an excellent job with the task of handling cryptocurrency operations.”

Calls for expansion of the exchange to handle DFAs follow the transition of the Toronto Stock Exchange and Deutsche Boerse to expand their offerings.

The plan could hit a brick wall

Although the plan has sparked a wave of excitement among digital asset enthusiasts, the road ahead for the MOEX could be fraught with difficulties. Shvetsov revealed that one of the main issues that could affect the move is a lack of familiarity, but that could have an upside if the cards are played right.

“When you don’t know who to call and who to sue, a lot of people don’t want to participate,” he said. “However, it’s a blank slate on which you can draw whatever you want, depending on the needs of the economy and investors.”

In August, Bank of Russia Governor Elvira Nabiullina warned that digital assets should not be traded on organized markets due to their inherent volatility. Despite critics’ stance, Russia is leaning towards digital assets as a way to settle international transactions amid tougher sanctions.

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