One Billion Rubles of Digital Assets Released in Russia in April

One Billion Rubles of Digital Assets Released in Russia in April

Russian news publications have claimed that the Russian government released digital assets worth about a billion rubles in April. The increase in volume has been attributed to Russian businesses testing out innovative financial instruments due to the restricted access to conventional capital in the country.

Digital Assets Market Expands in Russia

The Kommersant reported seven placements of digital financial assets (DFAs) for a total of about a billion rubles (USD 13 million) in Russia last month. The Business Daily has published the views of financial experts who have predicted that although the market is small, significant projects may be expected by the end of the year.

DFAs are a relatively new class of financial instruments in Russia, as described by the prevailing "Digital Financial Assets" law, which went into effect in January 2021. It represents "digital rights" to securities or utility tokens, as opposed to decentralized cryptocurrencies, which are not yet fully regulated and need an issuing entity.

Most of the DFAs issued in April were sold by the state-owned Sberbank, Russia’s largest banking institution, followed by Alfa-Bank, the largest private bank in the country. The two are among the operators of DFA platforms authorized by the Bank of Russia. Besides Atomyze, which specializes in the tokenization of commodities, the fintech company Lighthouse and the recently licensed Masterchain.

Since the central bank approved entities in March 2022 for issuing DFAs, placements have reached a total of two billion rubles (USD 26 million). Most analysts interviewed by Kommersant are still cynical, despite the significant increase in the following month. Roman Nekrasov, the co-founder of the Encry Foundation, which represents Russian IT companies, has stated that funds can be raised using existing tools such as corporate bonds.

Capital Markets Dry Up for Russian Businesses

Mikhail Uspensky, a member of the expert council of the working group on cryptocurrency at the State Duma, the lower house of the Russian parliament, has clarified that the scope of the DFA is limited to select large players. He has also admitted that capital markets have dried up for Russian businesses. "And many companies are trying to be innovative, experimenting with DFAs," Uspensky said, that issuing digital assets is largely a reputational move.

The unprecedented Western sanctions imposed over Moscow’s invasion of neighboring Ukraine have severely restricted Russian access to the global financial markets. Russian authorities have been initiating steps to expand the use of digital assets by legalizing crypto payments in cross-border trade and developing a digital ruble to mitigate the impact of the penalties.

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