Russia’s National Settlement Depository Successfully Tests Blockchain-based E-Voting System

News and Analysis

National Settlement Depository has finalized development and successfully tested blockchain-based E-proxy voting electronic voting system’s prototype.

The prototype is based on distributed cryptographic platform NXT and uses international standard ISO 20022 for message traffic. The development has been carried out with participation from DSX Technologies. The system’s open source code is available at GitHub.

E-proxy voting is an advanced technology for corporate operations maintaining electronic exchange of data and documents between securities owner and issuer.

The system has been first implemented at the NSD in August 2014. In April 2015, the technology has been improved and brought into compliance with ISO standards. In April 2016, e-proxy voting’s blockchain-based prototype has been tested for bondholder meetings.

Eddi Astanin, Board Chairman at the NSD said:

“Over the course of recent ten years, global financial infrastructure has faced challenges that require substantial revision of approaches towards reliability, security and speed of information systems. It’s is clear to us that ignoring rapid development of fintech and restricting ourselves to mere updating of impetuously outdating platforms is risky for steady development of national financial system. Fortunately, Russian developers are among the best in global fintech industry. We have proved it once again by successfully implementing a working prototype of blockchain-based electronic voting system. After implementing blockchain in bondholder meetings, the experience may be employed in other fields of the NSD’s activity.”

Existing e-voting technology implies message exchanging via chains of nominal holders from issuer to securities holder and reversely. The NSD here maintains the voting ledger by transmitting and counting voting instructions. E-Proxy Voting’s blockchain-based prototype registers the instructions directly in the distributed ledger, which is used by all chain participants at once.

Sergei Putyatinski, IT director at the NSD, added:

“Having analyzed where in the NSD’s activities blockchain might be most useful, we have chosen to automatize voting process at annual shareholders meetings. In six months, we managed to build a working prototype of blockchain-based e-voting. Tests have shown it operates at 80 instructions per second. Currently we’re working on increasing the system’s throughput to 300 instructions. The next step is legal and cryptographic evaluations of the new prototype. Their findings will enable us to consider running actual voting.”

Notably, chief architect of the NSD, Artyom Duvanov, has stated at recent forum “Blockchain and Open Platforms 2016”, that while the prototype is fully operational, its practical implementation would require introducing amendments to legislation in force.

The National Settlement Depository was established in 1996. The NST offers a wide range of services, including clearance and custody service, ex-pit transactions registering (repository), informational services, and collateral management. It services both domestic and foreign securities. Total amount of securities stored at the NSD as of March 31, 2016, comprises 31.7 trillion rubles.

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