"Exit from Closed Systems". What Will Change in the CFA Market from September 1

Starting September 1, a law comes into effect that contains new rules for the circulation of digital financial assets (CFA). Previously, CFAs were mainly traded in closed systems, which hindered market growth. Now, there will be the possibility to transfer them between platforms, expanding their use cases and making the assets more accessible to investors.

Provisions of the law "On Digital Currencies and Digital Rights" concerning CFAs aim to enhance liquidity and overall market efficiency, experts note. They explained how this will work and what opportunities will open up for digital financial assets.

What the New Law Allows

CFAs are exiting the closed information systems of operators, where they have "sat" for more than five years, says Alexander Nikolaev, an expert in the "Digital Assets" practice. He explained that the new law allows the issuance of digital rights, including CFAs, utility (UCP), and hybrid rights, directly on identifier addresses, i.e., on regular blockchain addresses.

It is even possible to split one issuance, where one part is accounted for in the operator's system, while another lives on-chain, the expert added. He clarified that the very concept of placement is now described through the entry of records on digital accounts or identifier addresses. "The circle of networks is not limited by the law, and in the draft provisions of the Bank of Russia, accounting in foreign information systems is described quite specifically, down to the identification of the network by the hash of the genesis block and asset codes according to international standards," Nikolaev said.

Identifying the network by the hash of the genesis block is a way to accurately determine a specific blockchain by the unique digital signature (hash) of its very first block (genesis block). This verification is performed by blockchain nodes when connecting to the network: if the hash matches what is written in the program, it means that the connection to the desired network has occurred.

The law also outlines the mechanics of transferring CFAs from one system to another. The operator who issued the digital rights opens a special digital account where the number of rights that have gone to blockchain addresses is mirrored, and they can only be returned to a regular account by ceasing on-chain accounting (conducting the procedure for redeeming/burning tokens), the expert explained.

The addresses are administered by a digital depository, which must also segregate client assets within the network, and the identification of buyers according to the "anti-money laundering" 115-FZ is mandatory already at the placement stage, Nikolaev added.

The second part of exiting closed systems, according to him, is that the operator can no longer refuse the digital depository or another operator the opening of a nominal holder account in their system. For existing platforms, this rule will come into effect on September 1, 2027.

What Changes in the CFA Market Will Lead To

The chosen approach aims to bring together the markets of various types of digital assets (cryptocurrency, CFA, utility digital rights UCP) and the traditional financial market, noted Roman Kozhura, managing director of investment business development at Sberbank. He explained that this approach will provide clients with a unified customer journey and a single interaction with various asset classes.

The new law lays the groundwork for future interoperability of platforms, which is currently almost non-existent, the expert says. He pointed out that this will work both through the institution of nominal holding (storing the asset in an account with a broker or in a depository) and through the use of public blockchains. "This is an important step towards increasing liquidity, competition, and overall market efficiency," Kozhura said.

Assets can be moved between platforms through nominal holding or brought onto the network, where they become visible to smart contracts, collateral, and settlement scenarios, which the operator's closed system did not allow in principle, Nikolaev explained, adding that therefore "CFAs have a chance for a normal secondary market."

"There is less freedom than in public crypto --- the addresses are administered, the buyer is identified, and for non-qualified investors, there remain testing and a limit of 300,000 rubles per year," the expert said. According to Nikolaev, the restructuring will take time, and existing operators need to submit documents to the register of digital depositories by September 1, 2027, and bring their activities in line with the law by September 1, 2028.

Kozhura added that the full implementation of all the innovations provided for by the law requires the regulator to adopt the corresponding subordinate legislation. It is currently in the preparation stage.

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