Regulatory arbitrage between digital financial assets, securities should be gradually eliminated in both directions - Nabiullina
MOSCOW. May 16 (Interfax) - The Central Bank of Russia will work to eliminate regulatory arbitrage between digital financial assets (DFAs) and securities, Central Bank Governor Elvira Nabiullina said at the National Association of Stock Market Participants (NAUFOR) conference titled "The Russian Stock Market 2025".
DFAs are digital equivalents of securities, issued in the form of entries in an information system based on distributed ledger technology (tokens), and confirm the investor's rights to an asset.
"Regulation of DFAs differs from regulation of the securities market, and there is arbitrage - that's undeniable. On one hand, issuing DFAs is cheaper and faster. On the other hand, DFAs cannot currently be purchased via a broker or on an exchange, and the tax treatment is also less favorable. At the same time, far more instruments can be structured in the form of DFAs than with securities. They can serve as analogs of bank guarantees, factoring, or be used in cross-border settlements," Nabiullina said.
"We believe it would not be quite right to abandon separate regulation of DFAs now. Rather, we should quickly, but gradually, eliminate regulatory arbitrage in both directions - tightening DFA regulation and at the same time adjusting securities regulation," she said.
The Central Bank plans to carry out this work specifically for DFAs that will be admitted to public circulation, she said.
"We are not proposing to automatically extend all provisions of the securities market law to them. However, requirements for disclosure, criteria for access by non-qualified investors, and consequences of delisting, in our view, should be identical. These are the areas where we want to level the playing field," she said.
"At the same time, we want to simplify issuance rules for plain securities. If we are talking about simple securities where the face value is returned along with interest payments, then there could be no need for a prospectus or dual oversight, since depositories essentially already perform control. We are ready to move in that direction. In our opinion, this would help develop both markets, and gradually converge them where appropriate. This approach would account not only for differences in record-keeping technology, but would also reduce issuers' costs of raising capital in any form. That's why we're ready to work with you to reasonably eliminate this regulatory arbitrage," she said.
Currently, the Central Bank's register of DFA platform operators includes 15 participants. The first platform was registered in February 2022. The volume of primary DFA placements grew ninefold last year to 594 billion rubles, the Central Bank said. Around 90% of the market is composed of DFAs analogous to short-term bonds, Nabiullina said. "We see that businesses have started to experiment more with issuing more complex DFAs, with more advanced functionality, but of course 90% of what's issued in the form of DFAs are relatively simple products '- simple cash instruments with terms of up to one year," she said.