Tokenised diamonds to test limits of cryptocurrency investing

A Russian state-owned fund has a novel strategy for attracting investment to the tundra and swamps of Siberia: selling its forests, gas, gold, even its fresh water and fish, one digital token at a time.

The plan will be trialled this month with a digital token sale backed by Siberian diamonds. Investors can buy a share in a diamond for as little as $10.

Advertised as a secure means for people to buy into commodities in affordable and easily tradeable units, the deals have been described by experts both as the future of investment and a major risk to investors.

In the coming months, experimental transactions such as these are set to test the limits of cryptocurrency innovation, as well as regulatory tolerance for them.

“We think we have several trillion dollars’ worth of valuables in Russia’s far east” that could someday be tokenised, said Alexei Chekunkov, chief executive of the Far East Development Fund, an investment arm of Russian state development bank Vnesheconombank.

Tokenised assets are traded via digital tokens on online exchanges. Instead of receiving physical assets, investors receive a digital receipt that represents their holdings. The price and ownership of the asset are recorded on a ledger that cannot be tampered with, making the transactions secure.

The technology, often called blockchain, is the same that underlies the $150bn cryptocurrency market for bitcoin and the latest surge in initial coin offerings. Mr Chekunkov said the same principles would eventually allow Siberia to sell everything from natural gas to fish.

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