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Monday, March 27, 2023

Financial Companies Report First Deal With Digital Assets Under Russian Law

Financial Companies Report First Deal With Digital Assets Under Russian Law – The first transactions for the issue and placement of digital financial assets (DFAs) have been disclosed by VTB Factoring, a subsidiary of the majority-state-owned Vneshtorgbank (VTB) of Russia and the fintech company Lighthouse.

Until specific legislation is passed, the latter is a general legal term in Russian law that includes several kinds of digital assets, including cryptocurrency.

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According to the companies’ press release, as part of the transaction, commercial debt from an unnamed issuer was first tokenized on the platform of Lighthouse, a registered “information system operator” permitted to issue and conduct business with DFAs, and then VTB Factoring purchased the digital assets.

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The parties are able to take advantage of very low transaction costs while also reducing the amount of time required to get finance by working with debt in the form of DFAs, according to a report from the RBC Crypto news outlet. The overall costs for the issuing entity are reduced as a result. 

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VTB Factoring’s CEO, Anton Musatov, added:

“Contrary to the typical factoring procedure, commercial debt assignment does not require the conclusion of a service agreement by the client. It is enough for the issuer to simply issue a DFA and secure the factor’s permission to buy it.”

The good news about the DFA operation comes shortly after Lighthouse and Tinkoff Business, the e-commerce arm of Russian neobank Tinkoff, announced the launch of a platform to streamline the exchange of digital assets. It will make it possible for big and medium-sized firms to use blockchain technology to raise funds.

The first DFA deal on a platform created by Russia’s largest bank will happen within a month, Sberbank deputy chairman of the management board Anatoly Popov revealed later in the month.

The state-controlled financial institution, commonly known as Sber, is a registered information system operator permitted to issue digital financial assets and is responsible for nearly a third of all bank assets in Russia.

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As decentralized digital assets like bitcoin are only partially covered by the current law “On Digital Financial Assets,” Russian officials are attempting to broaden the country’s regulatory framework to more thoroughly control them. To that aim, Russian MPs should review a new bill titled “On Digital Currency” in September.

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