The development of technology and legal regulation provides participants in the Russian financial market with opportunities to modernize existing infrastructure, enabling reduced transaction costs and greater flexibility of financial instruments. In particular, within securitization, attention should be paid to replacing traditional securitization models with transactions utilizing digital financial assets (DFAs).
Before exploring the use of DFAs in securitization deals, it is essential to understand the nature of digital financial assets. Under the Digital Financial Assets Law, a DFA constitutes a blockchain record certifying the digital rights of its holder. These digital rights may include monetary claims, which is particularly relevant for securitization.
In essence, a DFA is a type of token—a blockchain record. What distinguishes DFAs from other tokens is their recognition by legislators, allowing DFAs to certify rights that can be enforced in Russian courts and protected by law enforcement (a critical factor for potential investors). Having examined the nature of DFAs and their distinction from tokens, we now turn to the core topic: how can DFAs be used in asset securitization transactions?
We identify two approaches:
Since the securitization mechanism where DFAs serve as underlying assets for bonds does not fundamentally differ from "classic" asset securitization (e.g., mortgage pool securitization), we will focus on the second approach in greater detail.
The advantages of using DFAs as bond analogs in securitization include:
However, current regulations severely limit DFA use in classic securitization due to:
Nevertheless, our team anticipates demand for DFA-based securitization as bond substitutes. Under current rules, DFAs could potentially be used for:
As domestic DFA regulation evolves, DFAs may eventually displace bonds in classic securitization markets.
Authors: Ivan Makhalin, Partner, LECAP; Daniil Basin, Attorney, FOCUS Management
Listen to our podcast | Cbonds Handbook: Encyclopedia of Russian Securitization – 2025
Before exploring the use of DFAs in securitization deals, it is essential to understand the nature of digital financial assets. Under the Digital Financial Assets Law, a DFA constitutes a blockchain record certifying the digital rights of its holder. These digital rights may include monetary claims, which is particularly relevant for securitization.
In essence, a DFA is a type of token—a blockchain record. What distinguishes DFAs from other tokens is their recognition by legislators, allowing DFAs to certify rights that can be enforced in Russian courts and protected by law enforcement (a critical factor for potential investors). Having examined the nature of DFAs and their distinction from tokens, we now turn to the core topic: how can DFAs be used in asset securitization transactions?
We identify two approaches:
- Using DFAs certifying certain claims (e.g., consumer loans) as underlying assets in securitization deals.
- Using DFAs as the "outcome" of securitization (as an analog to bonds).
Since the securitization mechanism where DFAs serve as underlying assets for bonds does not fundamentally differ from "classic" asset securitization (e.g., mortgage pool securitization), we will focus on the second approach in greater detail.
The advantages of using DFAs as bond analogs in securitization include:
- Reduced transaction costs. DFA issuance does not require Central Bank registration, only approval by the information system operator (a specialized DFA platform). Operator fees may also be significantly lower than depositary fees, reducing overall issuer documentation costs.
- Efficient and reliable infrastructure. DFA ownership transfers are recorded on-chain, enabling near-instant settlement compared to depositary processes. Blockchain also mitigates record-loss risks.
- Enhanced flexibility. DFA issuance requirements are less stringent than those for structured bonds, and information system operators face lighter regulation, enabling bespoke terms unfeasible for traditional bonds.
However, current regulations severely limit DFA use in classic securitization due to:
- Gaps in DFA regulation. Key legal aspects (e.g., collateralization, holder voting rights, restructuring mechanisms) remain unresolved compared to bonds.
- SPV issuance barriers. Legislation does not explicitly permit DFA issuance by specialized financial companies (SFCs) or mortgage agents, precluding investor protections (e.g., limited issuer capacity) and tax benefits available to SPVs.
- Institutional investor restrictions. Banks face unclear rules on holding securitization DFAs, while pension funds and insurers are currently barred from using client assets to acquire DFAs.
Nevertheless, our team anticipates demand for DFA-based securitization as bond substitutes. Under current rules, DFAs could potentially be used for:
- Simple "repackaging" of contractual claims against one or more debtors into liquid DFAs, particularly for retail investors.
- Junior tranche structuring in traditional SFC-led securitizations.
As domestic DFA regulation evolves, DFAs may eventually displace bonds in classic securitization markets.
Authors: Ivan Makhalin, Partner, LECAP; Daniil Basin, Attorney, FOCUS Management
Listen to our podcast | Cbonds Handbook: Encyclopedia of Russian Securitization – 2025