Russia Issues Digital Token to Encourage Palladium Investments

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Photo Credit: Andrey Rudakov/Bloomberg

With the introduction of a palladium token, transactions involving digital assets backed by precious metals are now possible in Russia. The rare metal is not a publicly accessible asset in the Russian Federation but is used in jewelry and has some high-tech applications.

Rosbank and the Russian division of Atomyze, a platform that specializes in tokenizing commodities, have begun trading digital financial assets (DFAs) based on precious metals. The first one is the creation of a palladium token, the owners of which will be entitled to a financial claim equal to the metal’s market value, according to a press release from Atomyze.

According to the Prime Business News Agency, which covered the transaction, palladium is not a publicly traded asset on the Russian market. It is seen as a promising investment at the same time. Palladium is used in jewelry as a substitute for platinum, and demand for platinoids worldwide is rising. It is a commercial substance used in the production of high-tech goods.

Atomyze Russia is registered as a DFA platform operator with the Central Bank of Russia and is permitted to provide financial products based on the blockchain. The report elaborates on how tokenization can open up new possibilities and give businesses and individual investors new tools.

Until a specific law “On Digital Currency” is adopted, perhaps this fall, the only legal term that can currently apply to cryptocurrencies in Russia is “digital financial assets.” DFA, in contrast to decentralized coins, primarily refers to digital assets that have organizations in charge of their issuance and circulation that ensure the rights offered by the asset. Different tokens are in fact defined as “digital rights” in the law “On Digital Financial Assets.”

The issuance of digital rights allowing investment in raw materials like metals, according to billionaire Vladimir Potanin, one of the people behind Atomyze, is a new precedent in Russia. He went even further, declaring that the Russian economy is entering a new era known as “the era of tokenization.” Potanin has previously expressed the hope that tokens will take the place of “unreliable” crypto assets, along with the digital ruble. Some people think DFAs can replace foreign currency deposits as well.

Ekaterina Frolovicheva, CEO of Atomyze Russia, continued, “This first step is just the beginning of a great story that will include a new vision of traditional products and the creation of fundamentally new products for issuers and investors.”

Russia has yet to comprehensively regulate cryptocurrencies as the discussions on their future were prolonged by the current geopolitical situation. While most government institutions oppose their use as a means of payment in the country, a proposal to allow small crypto payments in international trade amid sanctions has been gaining support. A law recently signed by President Vladimir Putin bans DFA payments inside Russia.