What Is CFA: Comprehensive 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 solely in digital form. They are created and managed using blockchain technology, providing a high level of security and transparency for every transaction.

DFAs are similar to traditional financial assets like stocks, bonds, or debt obligations. The key distinction is that DFAs are exclusively digital, which opens up new opportunities for both investors and issuers.

Key features of digital financial assets include:

1. Digital format. All DFA transactions and accounting take place in the digital realm, making them fast and efficient. This reduces transaction times and operational costs significantly.

2. Blockchain technology. Blockchain technology delivers security and transparency for all DFA transactions, eliminating the risk of forgery or fraud. Every transaction is recorded in a distributed ledger, ensuring system reliability.

3. Legal regulation. In Russia, DFAs are governed by specialized laws that guarantee their legality and protect investor rights. This framework provides legal certainty for all market participants.

4. Diverse types. DFAs can represent various financial instruments, such as digital debt instruments (similar to traditional debt obligations), digital shares, hybrid digital rights, and other innovative financial products.

Types of DFAs

Digital financial assets are divided into several main categories, each with unique features and purposes:

What Is Included in DFAs

DFAs include digital rights such as monetary claims, rights under issued securities, rights to participate in the equity of non-public companies, and other financial instruments recorded in blockchain information systems. It's important to note that DFAs represent not the underlying assets themselves, but the digital representation of rights to those assets, recorded in a distributed ledger.

What Problems Do DFAs Solve

DFAs were introduced to address several major challenges in the traditional financial system:

How Are DFAs Different from Cryptocurrency

DFAs and cryptocurrencies both use blockchain technology, but there are important differences investors should understand:

• DFAs are digital rights regulated by law and tied to real assets or financial obligations. They operate within a legal framework and provide legal protection for investors.

• Cryptocurrencies are decentralized digital currencies, often not backed by real assets and not regulated by governments. They operate independently of the traditional financial system.

As a result, DFAs are a more regulated and legally protected investment compared to cryptocurrencies.

Pros and Cons of DFAs

As with any financial instrument, digital financial assets have advantages and disadvantages:

What Laws Regulate DFAs in Russia

In Russia, DFAs are regulated under Federal Law No. 259-FZ, dated July 31, 2020, “On Digital Financial Assets, Digital Currency, and Amendments to Certain Legislative Acts of the Russian Federation.” This law defines the procedures for issuing, accounting, and trading DFAs, and establishes requirements for information system operators who support the DFA market.

Are DFAs Considered Property

DFAs are classified as property rights under Article 128 of the Russian Civil Code. This legal status protects investor rights and enables DFAs to be used in various legal transactions, including purchase, sale, gifting, and inheritance. DFA holders have full property rights protected by law.

DFA Market Outlook in Russia

In recent years, the Russian market has seen significant growth in DFA issuance. Experts observe a steady trend of increasing market volume for digital financial assets. Analysts predict that, in the short term, Russia’s DFA market could reach substantial scale, reflecting growing interest from both issuers and investors.

DFA Operators

Only Russian legal entities listed in the official register of information system operators (ISOs) can serve as DFA operators. The Central Bank of Russia maintains this register and oversees operators. DFA operators handle issuance and accounting, provide user system access, organize transactions, and interact with government authorities to ensure compliance.

DFA Issuance Examples

Example #1. In July 2022, Atomize issued the first DFA backed by precious metals. This initiative sought to offer a more regulated and secure alternative to cryptocurrencies on the Russian market.

Example #2. In February 2023, Alfa-Bank issued DFAs backed solely by monetary rights. This allowed the organization to pilot a new financial instrument format and assess the digital asset market’s potential.

Example #3. In April 2024, the Ozon marketplace issued DFAs worth 2 billion rubles. This enabled the company to efficiently raise capital using an innovative financial instrument, showcasing DFAs’ practical application in corporate finance.

How to Buy DFAs: Step-by-Step Guide

Purchasing digital financial assets involves several key steps:

1. Choose an information system operator. Review the list of DFA operators on the Central Bank of Russia’s website and select one based on reputation and service terms.

2. Register on the platform. Create an account on the official website or app of the selected information system operator.

3. Complete identification. Verify your identity by submitting required documents and completing KYC (Know Your Customer) in line with legal standards.

4. Select a DFA for purchase. Explore available digital assets on the platform, review their features, terms, and potential returns, and choose your preferred asset.

5. Sign the contract. Use your qualified electronic signature to sign the contract and confirm the deal in compliance with regulations.

6. Make the payment. Pay through the operator’s payment system using available methods.

7. Receive the DFA in your account. Upon successful completion and payment confirmation, your DFA will be credited to your digital wallet in the operator’s system.

Where to Store DFAs

DFAs are stored in specialized digital wallets provided by information system operators. These wallets use advanced cryptography to ensure asset security. Only the rightful owner has access, and all transactions are blockchain-recorded.

What to Know About the DFA Secondary Market

The secondary DFA market is a vital part of the digital financial asset ecosystem. Here, investors can buy and sell DFAs after their initial issuance, adding flexibility to portfolio management. This greatly boosts asset liquidity and offers opportunities to profit from price changes. The secondary market helps establish fair pricing and enables dynamic investment strategies.

How to Create a DFA: Step-by-Step Guide

Creating and issuing digital financial assets involves these steps:

1. Register with an information system operator. Select an operator from the Central Bank of Russia’s official register and set up a corporate account for your organization.

2. Prepare documentation. Gather all necessary documents and details on the digital asset, including the issuance decision, placement terms, and owner rights.

3. Issue the DFA. Submit an issuance application through the operator’s system, supply the required documents, and confirm data accuracy.

4. Attract investors. Publish asset information on the platform, conduct a marketing campaign, and attract investors to purchase the DFA.

5. List assets on the market. After attracting investors and completing placement, the assets are officially issued and available for trading.

DFA Trading

DFA trading involves buying and selling digital assets on specialized platforms run by information system operators. This can appeal to investors seeking new opportunities and portfolio diversification. Successful DFA trading requires an understanding of digital asset specifics, market analysis, and risk management.

Criticism of DFAs

Despite their potential, digital financial assets face criticism from some market participants. Many experts believe the instrument is still immature and question whether it can fully replace traditional financial instruments.

Losses by some operators and difficulties accessing DFAs during real-world use have also raised concerns among potential market entrants. Critics highlight the need for further improvements in legislation and infrastructure to support a stable DFA market.

FAQ

What Are DFAs? Definition and Key Concepts of Digital Financial Assets

DFAs are digital financial assets in electronic form, including cryptocurrencies and other digital assets. They are electronic assets traded through online platforms in today’s financial ecosystem.

DFAs have three main certification levels to evaluate skills in financial analysis and investment management. These are used by finance professionals for career development and advancement. The certification confirms competence in portfolio management and financial planning.

DFAs have three main certification levels to evaluate skills in financial analysis and investment management. These are used by finance professionals for career development and advancement. The certification confirms competence in portfolio management and financial planning.

How to Buy and Store DFAs Securely?

Use trusted platforms to purchase DFAs. For storage, use hardware wallets to maximize private key security. Never share your private keys, and always enable two-factor authentication. Comply with local regulations.

What Risks Are Associated with DFA Investment? What Should You Watch For?

Investing in DFAs involves market risk, liquidity risk, and price volatility. Carefully research each project, diversify your portfolio, and monitor regulatory changes. Only invest what you can afford to lose.

DFAs and the Law — How Are They Defined and Regulated?

DFAs are digital financial assets regulated by national financial authorities. Their legal status varies by country: some treat them as securities, others as commodities. Regulators set requirements for issuance, trading, and investor protection to maintain market stability.

How Do DFAs Differ from Traditional Financial Assets?

DFAs are built on blockchain technology, offering decentralization, transparency, and programmability. Traditional financial assets depend on intermediaries, while DFAs use smart contracts for automatic execution, enabling more efficient, 24/7 transactions.

How Can a New Investor Start Investing in DFAs?

Start by learning the basics of digital financial assets, open a secure wallet, study the market, and begin with small amounts. As you gain experience and knowledge, gradually increase your investments.

What Is the Future Outlook for DFAs?

DFAs (Digital Financial Assets) have strong growth prospects as regulation expands and institutional adoption increases. Demand for digital assets is rising, with prices expected to climb significantly. The sector will advance through technological innovation and broader adoption.