The Central Bank of Russia has released a report highlighting the growing digital assets industry and its potential for further development. The report states that the issuance of digital financial assets (DFAs) in Russia is expected to witness significant growth shortly. The bank attributes this projected increase to the transparency and user-friendliness of these alternative instruments.
Anticipating the Emergence of New Digital Assets
The Central Bank also predicts the emergence of new types of digital assets that will not have analogs in the traditional financial market. These innovative assets are expected to cater to specific business needs. This suggests that the digital asset space in Russia is set to expand beyond existing offerings.
The legal concept of DFAs was established through the law “On Digital Financial Assets,” which came into effect in January 2021. Currently, this legislation is the only one that partially applies to crypto assets with issuers. However, decentralized cryptocurrencies like Bitcoin are yet to be regulated in Russia.
DFAs are tokens issued on a blockchain platform created and managed by licensed operators. Typically, these tokens represent monetary claims. The Central Bank has already granted authorization to several such operators, including Atomyze (a tokenization service), Lighthouse (a fintech company), Sberbank (Russia’s largest state-owned and private bank), Alfa-Bank (a major private bank), and Masterchain (licensed more recently).
In 2022, the first three registered platforms facilitated a total of 19 DFA issuances on behalf of 11 companies spanning various sectors. The issuers include large industrial firms, financial institutions, banks, construction companies, and other organizations. This highlights the diverse range of businesses that have embraced DFAs as a means to fund their operations.
DFAs as a Solution to Western Sanctions
Russian businesses have faced significant challenges due to Western sanctions, which have severely limited their access to global financial markets. In response, these businesses have explored alternative avenues for funding. Notably, in early December, it was announced that the first DFA deal denominated in Chinese yuan had taken place. This deal involved issuing DFAs secured by commercial debt, amounting to 58 million yuan (over $8 million). Furthermore, in April of the current year, seven placements of digital financial assets, totaling 1 billion rubles ($13 million), were executed.
The Central Bank of Russia holds a positive outlook for the future of digital assets in the country. Given the expected rise in DFA issuance, coupled with their transparent and user-friendly nature, Russia’s digital assets market is set to experience further expansion. The introduction of new types of digital assets will not only diversify the offerings but also address specific business needs. As the regulatory framework continues to develop, the digital assets sector in Russia is projected to flourish, offering alternative funding opportunities for businesses impacted by financial sanctions.
Ken Emmanuel is a Blockchain Content writer, a Web3 Enthusiast and a Social Media Management Strategist, he likes writing educative contents to help people gain more knowledge and get inspired. The growth of any organization he work with is always his priority. He is a Geographer by profession and loves reading.