What Is a CFA: A Complete Guide and Frequently Asked Questions

What Are Digital Financial Assets (DFAs) in Simple Terms

Digital financial assets (DFAs) are a new class of financial instruments that exist only in digital form. They are created and managed on a blockchain, which ensures their security and transparency.

DFAs are similar to traditional assets like stocks, bonds, or debt obligations. However, unlike classic instruments, DFAs exist exclusively in digital format and use distributed ledger technology to record and transfer rights.

For instance, while a traditional bond might be a paper certificate or a depositary entry, a digital bond—a type of DFA—is a blockchain record that automates payments through smart contracts. This makes the process more transparent, quicker, and cost-effective.

Key features of these assets include:

1. Digital Format. All DFA transactions and records are digital, enabling speed and efficiency. This eliminates physical documents and streamlines rights transfers.

2. Blockchain-Based. Blockchain technology secures and makes all DFA transactions transparent, preventing forgery or fraud. Every transaction is recorded in a distributed ledger and is available for review.

3. Legal Regulation. In Russia, DFAs are governed by dedicated legislation, ensuring their legality and protecting investor rights. This distinguishes them from many cryptocurrencies, which often operate in a legal gray area.

4. Variety of Types. DFAs can represent different financial instruments such as digital obligations (debt analogs), digital shares, hybrid digital rights, and more. This versatility allows them to address a wide array of financial tasks.

Types of DFA

DFAs fall into several main categories, each with its own features and applications:

What Falls Under DFA

DFAs include digital rights such as monetary claims, rights to issued securities, equity participation in private companies, and other financial tools recorded in blockchain-based systems.

DFAs are not just database entries—they are full property rights protected by law and usable in various legal transactions. This makes them attractive to both issuers and investors.

Problems DFAs Address

DFAs are designed to tackle major shortcomings of the traditional financial system:

How DFAs Differ from Cryptocurrency

DFAs and cryptocurrencies both use blockchain, but there are important distinctions:

• DFAs are legally regulated digital rights linked to real assets. They give owners specific rights (like income or governance). Regulators and system operators oversee their issuance.

• Cryptocurrencies are decentralized digital currencies, typically not backed by real assets or regulated by governments. They primarily serve as mediums of exchange or stores of value and usually don’t provide rights to assets or income.

For example, owning a DFA in the form of a digital bond grants you rights to interest and principal repayment. Owning cryptocurrency means you hold a digital asset whose price is set by the market but grants no right to payments or assets.

Pros and Cons of DFAs

Like all financial instruments, DFAs have advantages and disadvantages to consider:

Which Laws Govern DFAs in Russia

DFAs in Russia are governed by Federal Law No. 259-FZ of July 31, 2020, “On Digital Financial Assets, Digital Currency, and Amendments to Certain Legislative Acts of the Russian Federation.” The law defines rules for issuing, accounting, and trading DFAs, and sets requirements for information system operators.

This law provides the legal foundation for the DFA market, including requirements for issuers, operators, and investors. It also outlines liability for violations and mechanisms for protecting market participant rights. The Central Bank of Russia also issues further regulations detailing procedures and requirements.

Are DFAs Considered Property?

DFAs are a form of property right under Article 128 of the Russian Civil Code. This status provides for investor protection and enables DFAs’ use in various legal transactions—including buy, sell, gift, and inheritance.

This means DFA owners have full property rights protected by law. DFAs can be pledged, inherited, or used in other civil-law transactions, making them a comprehensive financial instrument comparable to traditional securities.

DFA Market Outlook in Russia

Recently, the Russian market has seen an uptick in DFA issuance. Experts estimate that in the near future, the Russian DFA market could reach significant volumes—reflecting growing interest from both issuers and investors.

Experts expect further market infrastructure development, including new system operators, a wider range of available tools, and improved liquidity. DFAs are anticipated to become a more common means of raising capital and investing.

DFA Operators

Only Russian legal entities listed in the Central Bank of Russia’s information system operator (ISO) registry can act as DFA operators. These operators handle DFA issuance and accounting, provide user system access, and interact with government bodies.

Operators play a crucial role in the DFA ecosystem. They are responsible for technical infrastructure, data security, legal compliance, and investor rights protection. To gain operator status, entities must meet strict requirements, including adequate capital, qualified staff, and robust technology.

Operators also integrate with other market participants—such as banks, depositories, and clearing organizations—building a complete infrastructure for DFA trading and ensuring liquidity.

Examples of DFA Issuance

DFAs are increasingly being issued in Russia, and several notable cases have emerged:

Example #1. The Atomize platform launched the first DFA backed by a precious metal, enabling investors to access gold via a digital asset—streamlining the process and reducing costs.

Example #2. Alfa-Bank later issued DFAs secured solely by monetary rights, demonstrating DFAs’ potential for raising debt capital in digital form.

Example #3. Recently, the Ozon marketplace issued DFAs for a large amount, showing that major companies can use DFAs to raise funds—opening new opportunities for business growth.

These examples highlight the diversity of DFA applications and their potential across various economic sectors.

How to Buy DFAs: Step-by-Step Guide

Buying DFAs involves several steps:

1. Select an information system operator. Review the DFA operator registry on the Central Bank of Russia’s site and choose a suitable operator. Consider reputation, available instruments, and service terms.

2. Register on the platform. Create an account on the operator’s website or app, providing basic personal information.

3. Complete identification. Verify your identity and complete KYC (Know Your Customer). This is mandatory for all DFA participants and requires identity documents.

4. Select a DFA to buy. Browse the platform’s available assets and choose one. Review issuance terms, risks, and expected returns.

5. Sign the transaction. Use your electronic signature to complete the deal—this gives the transaction legal force.

6. Make payment. Pay for your purchase on the operator’s platform—typically via various methods including bank transfer.

7. Receive DFAs in your account. Once completed, your DFAs are credited to your digital wallet within the operator’s system. You’ll be able to track and manage your assets.

Where to Store DFAs

DFAs are held in digital wallets provided by information system operators. These wallets use cryptography to secure your assets.

DFA wallets differ from cryptocurrency wallets—they integrate with the operator’s system and account for rights under Russian law. Operators are responsible for safeguarding data and preventing unauthorized access.

Investors should use extra security—such as two-factor authentication and regular password updates—to minimize risk.

What to Know About the DFA Secondary Market

The DFA secondary market exists. Investors can buy and sell assets after the initial offering—enhancing liquidity and creating profit opportunities from price changes.

The secondary market operates via system operator platforms. Secondary trades also require participant identification and legal compliance. Prices are determined by supply and demand, which can lead to deviations from nominal asset value.

However, DFA secondary market liquidity remains limited compared to traditional securities markets. Selling assets may take longer, especially for less popular tools.

How to Issue DFAs: Step-by-Step Guide

Issuers looking to offer DFAs will follow these steps:

1. Register with an information system operator. Choose an operator from the Central Bank’s registry and create an account. Discuss issuance terms and documentation with the operator.

2. Prepare documentation. Gather all required documents and information on your digital asset—including description, issuance terms, owner rights, payment procedures, and all details required by law.

3. Issue DFAs. Submit an application via the operator’s system and confirm your data. The operator verifies documents and regulatory compliance.

4. Attract investors. List your asset on the platform and engage potential investors—possibly through marketing, presentations, and working with market professionals.

5. Place assets on the market. After attracting investors, assets are issued and listed. The issuer must fulfill DFA holder obligations as per issuance terms.

Issuing DFAs requires strict legal compliance and may need input from legal and financial professionals.

DFA Trading

DFA trading means buying and selling digital assets on specialized platforms—an appealing option for investors seeking new profit opportunities.

DFA trading differs from traditional tools: the market is less liquid, with wider bid-ask spreads. DFA prices can also be more volatile, offering both profit potential and loss risk.

Traders can use many strategies—long-term investing, short-term trading, or arbitrage across platforms. But always consider the risks, and never invest money you can’t afford to lose.

Success in DFA trading requires deep market knowledge, analysis of underlying factors affecting value, and strong risk management. Beginners should start with small amounts and build experience gradually.

DFA Criticism

Not all market participants are optimistic about DFAs. Many experts and practitioners call them an unworkable concept that can’t fully replace traditional financial tools or seriously compete with classic cryptocurrencies.

Main criticisms of DFAs include:

1. Limited functionality: DFAs work only within Russian jurisdiction and cannot be used for international transactions as freely as cryptocurrencies.

2. Centralization: Unlike decentralized cryptocurrencies, DFAs are controlled by operators and regulators, which contradicts financial freedom principles.

3. Technical challenges: DFA purchase tests revealed acquisition difficulties, inconvenient interfaces, and lengthy identification processes.

4. Operator losses: Many system operators are still unprofitable, raising doubts about the business model’s sustainability.

5. Low liquidity: The DFA secondary market is underdeveloped, making it hard to sell assets quickly at fair value.

6. Complexity for the mass user: KYC procedures, electronic signatures, and other requirements keep DFAs out of reach for the general public.

Critics also argue that regulators’ efforts to create alternatives to traditional cryptocurrencies through DFAs may be ineffective, since they serve different purposes and audiences. Time will reveal whether these concerns are justified and if the DFA market can overcome its growing pains.

FAQ

What are DFAs? How do they differ from traditional fiat and cryptocurrencies?

DFAs are digital financial assets that exist on the blockchain. Unlike traditional fiat, they are fully digital and don’t require a central bank. Cryptocurrency is a type of DFA with decentralized features, but DFAs also include digital securities, tokenized assets, and other forms.

What are the main features and advantages of DFAs?

DFAs (Digital Financial Assets) offer high liquidity, low fees, and round-the-clock trading. They provide global access, blockchain transparency, and rapid settlement without intermediaries—an innovative way to invest with strong growth potential.

What are the practical use cases for DFAs?

DFAs are used for international payments, trade settlements, cross-border transactions, loyalty programs, and project financing. They enable fast, low-cost global fund transfers and smart contract automation.

Is it safe to use DFAs? What risks and privacy issues exist?

DFAs use standard security measures, but risks exist—such as cyberattacks and data leaks. Choose reputable platforms, enable two-factor authentication, and safeguard your private keys to reduce risks.

How are DFAs developing among central banks worldwide?

Central banks are actively developing digital currencies. Russia plans to finish its legislative framework by 2026 and increase oversight in 2027. China, the US, the EU, and others are also working on CBDCs, emphasizing security and crypto market regulation.

What impact do DFAs have on the financial system and economy?

DFAs improve financial analysis, boost market transparency, enhance investment decisions, and drive modernization and economic growth.

How can an ordinary person obtain and use DFAs?

Register on the official website, apply for the exam, complete training, and pass the test. Upon completion, you’ll receive a DFA certificate for professional development.

How are DFAs related to blockchain technology?

DFAs (digital financial assets) are built on blockchain, using distributed ledgers for decentralized transactions and asset management. Blockchain provides a secure, transparent, and immutable base, enabling fast settlement and cross-border flows.

What are the prospects for DFA development?

DFAs are set to grow as demand for digital assets rises, blockchain integrates with traditional finance, and regulations expand. By 2026, trading volumes should increase and new DFA use cases will emerge across various sectors.