Russia's Biggest Digital Financial Asset Transaction in Chinese Yuan

Russia's Biggest Digital Financial Asset Transaction in Chinese Yuan

Russia’s first authorized transaction with digital financial assets (DFAs) has been denominated in Chinese yuan. A Russian company has announced the country’s largest deal ever under the prevailing DFA law that covers the issuance of tokens secured by commercial debt.

Digital Financial Assets for 58 Million Yuan Issued

The licensed Russian firm has finalized the first deal with digital financial assets denominated in foreign fiat. The transaction entails the issuance of commercially secured DFAs worth 58 million yuan (approximately 516 million rubles or USD 8.26 million).

The transaction was done on a platform developed by Lighthouse, which was approved by the Bank of Russia in March as one of the "information systems operators" for managing digital financial assets. Sberbank, the country’s largest bank, and the tokenization service provider, Atomyze, were also registered to manage DFAs.

The Russian authorities have been working to adopt a more comprehensive legal framework for all digital assets, including cryptocurrencies. However, the law "On Digital Financial Assets" regulates transactions with coins or tokens that have an issuer and has been effective since January 2021.

Officials in Moscow now want to legalize crypto payments in cross-border settlements and expand the use of the ruble and the national currencies of partners like China in foreign trade. The main objective is to circumvent restrictions imposed by the West over the war in Ukraine and reduce Russia’s dependence on the USD and the euro.

Lighthouse has pointed out that the first DFA transaction involving foreign currency has also become the largest transaction for digital financial assets, reports Russian crypto news outlet RBC Crypto. 

New Financial Instrument

The fintech company has revealed that the maturity period of the tokens issued is 29 days and the interest rate is 4%. It highlights the advantages of DFAs over short-term lending in rubles, which is 9–10% per annum. It was also noted that DFAs reduce the risks of currency fluctuations for issuers.

Lighthouse General Director Denis Iordanidi believes that the new financial instrument will provide an opportunity to make cheap short-term investments without competing with the traditional bond market that offers long-term financial investments. 37% of Russian companies are ready to enter the DFA market as issuers, according to the survey report that was conducted in November.

What is your take? Do you expect Russian-licensed platforms to issue DFAs in foreign fiat?