DFA and cryptocurrencies are distinct entities with separate regulations in Russia. The current federal law, “On Digital Financial Assets and Digital Currency,” focuses on regulating digital financial assets (DFA) rather than cryptocurrencies, despite cryptocurrencies being the most valuable assets on the blockchain globally.
The law defines digital financial assets as rights that are issued, recorded, and circulated through blockchain technology. These rights encompass monetary demands, rights under equity securities, participation in non-public joint stock companies, and the transfer of issue-grade securities. DFAs act as investment products and cannot be used for the purchase of goods and services. They primarily facilitate familiar financial instruments that are simplified and enhanced through blockchain technology.
Regulation of DFAs in Russia involves three key actors: the information system operator, the exchange operator, and the user or investor. The information system operator ensures the functioning of the blockchain, user onboarding, and interactions with authorities and courts. They must be registered in a special state register. Currently, there are ten operators, including major banks like Sberbank and Alfa-Bank, as well as specialized organizations such as Atomize and the St. Petersburg Stock Exchange.
The exchange operator facilitates transactions involving DFAs and must be registered with the Central Bank. They need to be a Russian legal entity, have a minimum authorized capital and net assets, meet specific qualifications for governing bodies and officials, comply with exchange rules, and establish internal control and risk management systems. As of now, only the Moscow Exchange has been registered as an exchange operator.
To invest in DFA, individuals must register on platforms associated with the operator. The requirements for investors vary depending on the platform’s rules. Qualified investor status grants additional benefits, such as increased transaction opportunities and the removal of the Central Bank’s annual investment limit of 600,000 rubles.
Examples of DFAs in Russia already exist. Norilsk Nickel released DFAs for its employees, which include dividend payments. The Samolet group launched a DFA tied to the price per square meter in their construction projects, allowing investments in specific properties. Atomize, in collaboration with Rosbank, introduced hybrid rights to gold, enabling investors to choose between redeeming DFAs for a physical gold bar or receiving its cash value. DFAs for precious stones have also emerged.
The development of the digital financial assets market in Russia is still in its early stages. While the federal law is now in full effect and major players are entering the market, the usage of DFAs within the legal framework remains limited and authorized by the state. Cryptocurrencies and DFAs are legally distinguished, and cryptocurrencies continue to operate on the fringes of formal recognition.
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