Issuance of Digital Financial Assets (DFAs): how it works in Russia
The issuance of digital financial assets (DFAs) in Russia is the process of creating and placing digital rights within an information system registered with the Bank of Russia.
As explained in Section 4.1, DFAs represent legally defined digital rights, and their circulation takes place within a regulated infrastructure described in Section 4.2.
From an economic perspective, the issuance of DFAs is similar to issuing traditional financial instruments (such as bonds). However, in Russia this process is implemented in a digital environment through licensed information system operators (ISOs).
Legal framework for DFA issuance in Russia
The issuance of DFAs is strictly regulated.
The key legal document is Federal Law No. 259-FZ “On Digital Financial Assets”.
Additionally, the following apply:
- regulations of the Bank of Russia
- rules of a specific information system (ISO)
- general civil law provisions
Therefore, DFA issuance is a regulated process, unlike the open token issuance model in crypto markets.
Participants in the DFA issuance process
Several parties are involved in issuing DFAs:
- issuer — the company issuing the DFA
- information system operator (ISO) — the infrastructure provider
- investors — acquire digital rights
- exchange operator (if applicable) — provides secondary market trading
The ISO plays a central role by:
- issuing DFAs
- maintaining ownership records
- ensuring execution of obligations
Stages of DFA issuance
The DFA issuance process in Russia consists of several steps.
1. Structuring the instrument
At this stage, the issuer defines:
- the type of DFA
- maturity
- yield
- payment structure
- risks
This defines the financial model of the instrument.
2. Preparation of documentation
The issuer prepares key documents:
- decision on issuance
- terms of circulation
- description of investor rights
- risk disclosure
This documentation performs a role similar to a prospectus in traditional finance.
3. Issuance within an information system (ISO)
The DFA is issued through the ISO:
- a smart contract is created, defining all parameters
- the issuance is recorded in the system interface
- the smart contract is deployed within the ISO’s private blockchain
From this moment, the DFA exists as a digital asset within the system.
4. Placement among investors
Investors acquire DFAs through the platform:
- complete identification (KYC)
- submit orders
- receive digital rights
All settlements occur within the platform infrastructure.
5. Execution of obligations
After placement:
- the issuer makes payments (interest, principal)
- the ISO records execution
- investor rights are updated automatically
In some cases, payments may be automated.
Comparison with bond issuance
DFAs are often compared to bonds, as debt instruments dominate the market.
| Criterion | Bonds | DFAs |
|---|---|---|
| Infrastructure | Exchanges, depositories | ISO |
| Issuance process | More complex | Simplified |
| Time to issue | Longer | Shorter |
| Recordkeeping | Depository-based | Digital ledger |
| Investor access | Broad | Restricted |
Cost and speed of issuance
In practice, DFA issuance may:
- require less time
- involve fewer intermediaries
- allow more flexible structuring
This is due to:
- digital recordkeeping
- simplified procedures
- reduced infrastructure layers
However, actual parameters depend on:
- the platform (ISO)
- instrument complexity
- regulatory requirements
DFA yields
In some cases, DFAs offer higher yields than comparable bonds.
This may be due to:
- lower liquidity
- novelty of the instrument
- limited investor access
- risk premium for infrastructure and regulation
Higher returns are therefore not guaranteed, but often reflect compensation for additional risks.
Role of the information system operator (ISO)
The ISO is the core element of DFA issuance.
It acts as:
- a technological platform
- a registry of rights
- a control mechanism for execution
In practice, the ISO combines functions traditionally performed by multiple financial institutions.
Limitations
The DFA issuance model in Russia has several limitations:
- investor access is regulated
- instruments are standardized
- compliance requirements are strict
- the secondary market is still limited
This distinguishes DFAs from the more developed bond market.
Conclusion
The issuance of digital financial assets in Russia is a digital form of financial instrument issuance within a regulated infrastructure.
It combines:
- principles of traditional finance
- digital recordkeeping
- simplified issuance procedures
In practice, DFAs are primarily used as a tool for debt financing and are becoming an alternative channel for raising capital in the Russian financial system.