Russia’s Largest Digital Asset Deal Denominated in Chinese Yuan – A licensed company has finalized Russia’s first transaction involving digital financial assets denominated in foreign fiat currency. The transaction involved the issuing of DFAs worth 58 million Chinese yuan (approx. 516 million rubles or $8.26 million) secured by commercial debt.
It took place on a platform created by Lighthouse, one of the “information systems operators” approved by the Bank of Russia in March to manage digital financial assets. Sber, the largest bank in Russia, and Atomyze, a tokenization service, were also registered as such.
While Russian authorities have been attempting to develop a more complete legal framework for all digital assets, including cryptocurrencies, the law “On Digital Financial Assets,” which went into effect in January 2021, regulates certain transactions involving issuer-backed coins and tokens.
Officials in Moscow seek to legalize crypto payments in cross-border transactions and boost the usage of the ruble and national currencies of trading partners such as China. The primary objective is to overcome restrictions imposed by the West in response to the Ukraine conflict and to diminish Russia’s reliance on the U.S. dollar and the euro.
Lighthouse noted, as reported by the Russian crypto news portal RBC Crypto, that the first DFA operation involving foreign currency was also the largest placement of its sort on the country’s market for digital financial assets. The fintech company explained that the tokens have a 29-day maturity and a 4% interest rate, underscoring the advantages of DFAs over short-term financing in rubles, which carries an annual rate of 9 to 10%. It was also emphasized that DFAs lower the risk of loss from currency fluctuations for issuers.
Denis Iordanidi, general director of Lighthouse, believes the new financial product would enable investors to make inexpensive short-term investments without competing with the traditional bond market, which offers long-term financial investments. According to a November survey, 37% of Russian companies are prepared to enter the DFA market as issuers, according to the report.