Sergey Popov, Director of Sberbank’s Transactional Business Division, talked about how digital financial assets (DFA) can attract investors and issuers, as well as the risks of investing in DFA.
“There are no fundamental financial differences between CFA and traditional financial instruments, other than the technological issuance process and subsequent turnover, which implies the absence of intermediaries. As part of the initial placement of the DFA, the issuer creates the package insert itself and places it on the platform. To attract potential issuers to obtain financing through a DFA issuance, the cost of issuance must be much lower than when placing traditional financial instruments. Although CFAs differ in the issuer’s business and sources of income, issuers have no restrictions on the main types of activities: lease payments, real estate, changes in the exchange rate of the underlying asset, etc. The main goal for us is to create a system that allows the issuer to automatically create a smart contract by selecting the type of activity on the platform and filling in the standard data. It will be possible to simply reject paper contracts,” he said.
Popov also talked about the benefits of CFA to investors.
“The key advantage for investors is the CFA secondary endorsement market, meaning you can transfer such an asset to another person remotely without any hassle, making it a very liquid tool. Although there is no such requirement at the legal level, Sberbank also considers the issue of minimizing investor risks. It is important for investors to convey comprehensive and reliable information on CFA issuers,” Popov said.
In addition, the expert spoke about the risks.
“A distributed registry is a future technology that, due to the presence of many nodes for storing and transmitting data, allows in principle to continue infrastructure interaction even when several nodes (servers) leave the system. the system will continue to run on other nodes (servers). When we talk about blockchain technology, we are talking about such an infrastructure, whose reliable functioning is provided by an unlimited number of nodes.
As for DFAs, transactions with them are also transparent to private network members. At the same time, DFAs in a private network cannot be blocked by third parties unrelated to the network, unlike bitcoin. “Accessing a private network from the outside is basically impossible,” Popov said.
He added that over time, DFA exchange operators will emerge and what transactions various platforms will handle with DFA. According to him, Sberbank also plans to become such a currency operator.
In 2021, the State Duma passed a law on the CFA. In 2022, the first operators to issue such assets appeared. One of them was Sberbank, which placed the first CFA issue on its platform as part of a pilot project.