At the end of 2024, the tokenization market in Russia exceeded RUR 150 bln ($1.7 bln), expanding from about a quarter of that size just a year ago. This new financial instrument – digital financial assets, DFA – is predicted to have a great future. Expectations are high that this market may grow by as much as 100 times. Anatoly Aksakov, Chair of the State Duma Committee on Financial Markets, proposed easing the new instrument’s way to the stock market, while the Moscow Exchange issued DFAs as part of a pilot project on the Finuslugi platform. Leading Russian experts explained to the Invest Foresight business magazine what caused the explosive interest in tokenized assets among issuers and investors, what prospects the new instrument really has and whether its popularity will grow or the demand will remain limited to a market niche.
Valery Petrov, member of the Expert Council at Russian Crypto Industry and Blockchain Association (RACIB), Vice President of Mera Capital group
– The main reasons why the DFA market is growing so fast are, on the one hand, the fact that the most pressing technological problems in the issuance and organization of DFA sales have been solved — for example, through banking networks like Alfa Bank did. On the other hand, the Russian Central Bank has set a very high key rate and, as a result, the yield on DFAs exceeded the yield on deposits. Otherwise, interest in the instrument would not be so high, and it would not be able to compete so well with traditional instruments. This means that increased interest will remain, primarily as long as DFAs provide a higher return than traditional instruments.
Prospects for market development largely depend on the timely improvement of legislation, including the procedure and rules for taxation, as well as the organization of a secondary market. If the latter issue is resolved, we may see a renewed surge of interest in the asset (since speculators will be able to join the investments).
In the context of sanctions and the inaccessibility of classic crypto assets for most people in Russia, DFAs will be in high demand and have development potential as long as Russia is cut off from the global digital investment market – mainly as an instrument with a simplified issuance procedure and sufficiently high reliability due to the participation of trusted operators, as well as due to the high need of issuers for borrowed funds. And of course, DFAs can become a good instrument for the development of the domestic investment market for investing in the Russian economy.
Viktor Dostov, Board Chair, Russian Electronic Money and Remittance Association (REMA)
– Digital financial assets were invented as a high-tech alternative to securities and monetary instruments, and as such they are of interest. At the moment, however, the actual demand for the instrument is not very high. The main problems of DFAs in Russia, in my opinion, lie in rather strict restrictions on possible products, and limited accessibility for retail investors. Legislation is also not comprehensive. Another fundamental issue is the technological difference between DFAs and securities market instruments. Participants of the latter reasonably note that the simplification of requirements for DFAs should be accompanied by a symmetrical simplification of requirements for the traditional market. If this happens, then DFAs will lose certain competitive advantages.
Regarding the role of digital financial instruments in cross-border settlements, I believe it is highly overstated. These instruments are not true payment methods and remain highly vulnerable to sanctions. In any case, the digital financial market is still in its early stages, making long-term predictions challenging.
Olga Borisova, Associate Professor at the Department of Corporate Finance and Corporate Management, Financial University under the Government of the Russian Federation
– Digital financial assets are still in the early stages of development, but the market is expected to expand as companies gain experience and introduce new tools to Russian investment platforms. Currently, DFAs are primarily used in the B2B sector due to existing restrictions for unqualified investors.
For businesses, DFAs offer an efficient way to raise debt financing, reducing both time and placement costs while providing an attractive alternative to traditional financial instruments. For investors, they serve as a means of diversifying primarily short-term investments. However, competition with bank deposits is unlikely, particularly among private investors who do not meet qualification criteria. Demand remains limited due to regulatory requirements set by the Bank of Russia, including investment caps of no more than 600,000 rubles and specific restrictions on DFAs themselves.
Alexei Ravinsky, General Director, Zapusk Group
– In the short term, by 2025, Russia’s digital financial assets market could approach the 1 trillion-ruble mark, driven by an expanding investor base, including institutional players, and the alignment of tax regulations with traditional securities. Looking further ahead, by 2027–2028, the market size may reach 3–5 trillion rubles. This rapid growth is fueled by the country’s accelerating digitalization of the financial sector, with DFAs potentially becoming an integral part of it. Their role in international settlements, such as within the BRICS PAY system, could further enhance their adoption.
However, the Russian DFA market has unique characteristics. It started from a low base and remains highly concentrated, with over 70% controlled by three major banks – Alfa-Bank, VTB, and Sberbank. Additionally, most issuances focus on short-term funding, making them particularly attractive to investors amid a high key interest rate environment.
Although impressive, Russia’s market growth remains largely a localized phenomenon. Globally, the digital asset market is expanding as well, but other countries focus on cryptocurrencies and the tokenization of traditional assets. In Russia, DFAs are essentially tokenized versions of real assets; this sets them apart from cryptocurrencies and makes them more appealing to both regulators and investors.
Artem Genkin, Professor, CEO of Consulting & Analytical Union
– Digital financial assets will undoubtedly become a B2C tool in the future, but this will only occur with a few certain factors in place, namely:
- Establishing a legislative basis and an equivalent of the Deposit Insurance Agency (DIA) for securities market participants, ensuring that Russians’ investments in digital financial assets are covered by insurance under certain conditions.
- A significant increase in the number of independent information system operators (platforms to issue DFAs) registered by the Central Bank, as many platforms are currently captive and controlled by large financial and industrial groups, operating to serve primarily internal corporate B2B tasks.
- A balanced compromise between a regulator and issuers, which will allow for more appealing DFA products to be accessible to mass unqualified investors, beyond just those that merely use traditional basic bank deposit parameters.
Additionally, I can assume that the current standardized services provided by a limited number of information system operators will soon be insufficient for a DFA issuer. The most forward-looking ones are already working to create marketplaces for clients to access a wide range of DFAs, sort of an Uber for investors. However, the benefits for individual issuers as well as reasons for investors to choose a particular platform are still unclear. In this regard, I believe that we will see a greater demand for customized consulting and underwriting services from potential issuers.
I would also like to note the related issue of defaults. While there have been no precedents in the DFA market, they are inevitable – particularly given the varying quality of the issuers and their documentation during the first wave. As a result, investors will inevitably come to the realization that not every DFA is a worthwhile investment. Also, these tools do not offer substantial risk premiums, with yields mostly comparable to those of traditional debt instruments. Therefore, in the mid-term, ratings and analytics tools will play an increasingly important role, while investors will become more selective in their choices.