Russian Stock Exchange Seeks Digital Financial Asset License

In Brief

• Digital Financial Assets (DFA) are becoming an increasingly popular way for Russian businesses to raise capital.
• Now, the Moscow Stock Exchange wants to launch its own DFA capabilities by the end of the year.
• Some government officials have voiced concerns that if DFAs become too integrated into stock exchanges it could erase any distinction between digital assets and traditional securities.

Russia’s Moscow Stock Exchange wants to begin issuing and trading digital financial assets by the end of the year.

If it gets its way, the Moscow exchange will become just the 9th entity licensed to do so.

Russian Firms Embrace Digital Financial Assets
Amid difficulty accessing foreign funding in the current geopolitical climate, Russian businesses have increasingly turned to digital assets as a way to raise money.

And since 2021, Russian regulation has provided just such an avenue to shake up financial markets. Under the 2021 Act, Digital Financial Assets (DFA) are a category of asset that exists somewhere between crypto and traditional securities.

Essentially, DFAs are tokenized shares in a company or other corporate venture. In recent years, various entities have used them to raise capital. And their popularity is growing.

For example, last month, the state-owned Russian Railways carried out the largest financial instrument issuance to date. The national railway operator raised 15 billion rubles through its DFA sale.

But up until now, the country’s largest stock exchange hasn’t fully embraced the technology.

Last month, the St Petersburg Stock Exchange became the first exchange operator to register with the Bank of Russia as a DFA exchange.

Including the St Petersburg exchange, eight companies are registered to issue and list DFAs. These include Sberbank, Alfa-Bank, and the digital asset platform Atomize.

Moscow Stock Exchange Eyes End of 2023 for DFA Listings
In comments reported by BeInCrypto, Sergey Demidov, Director of Information Security at the Moscow Exchange Group, said the company was planning to introduce DFAs by the end of the year.

He added that the firm is working with Russia’s national bank to obtain the necessary permissions.

Russia Seeks More Streamline DFA Market
As Russia’s DFA market evolves, the country’s policymakers are looking further to encourage the adoption of the new financial instrument.

One law making its way through the State Duma could streamline the process by allowing the likes of the Moscow Stock Exchange to issue and list DFAs on the same platform they use to enable trade in traditional securities.

However, the Ministry of Finance has voiced concerns over plans further to integrate the DFA market into traditional financial infrastructures. In April, an official said that the Ministry generally supported the technology.

But he warned that allowing DFAs to be listed on stock exchanges risked blurring the line between digital assets and securities.

Disclaimer
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