Legislation on digital financial assets: on the verge of reforms

The article presents a systematic analysis of the legal regulation of the digital financial asset (DFA) market and identifies its key challenges. Russia was among the first countries to establish a special legal regime for digital assets. However, the market is currently dominated by monetary DFAs, as legal uncertainty regarding other types of DFAs constrains the emergence of new financial instruments. This indicates that the existing regulatory framework does not fully unlock the potential of DFAs as innovative financial instruments. The formation of a secondary DFA market is hindered by the fragmentation of market infrastructure. Most information system operators are integrated into banking ecosystems, which limits the pool of potential investors to bank clients. The lack of interoperability between platforms further impedes the circulation of DFAs. Moreover, the Bank of Russia allows organized trading in DFAs only through intermediaries, which effectively negates one of the core advantages of digital assets-their ability to eliminate intermediaries and operate in a decentralized manner compared to traditional securities. The insufficient protection of DFA investors compels the Bank of Russia to impose high entry barriers to the market. This issue is compounded by information asymmetry: the absence of mandatory disclosure requirements for issuers and the lack of rating mechanisms prevent investors from adequately assessing the risks associated with acquiring DFAs. The identified problems largely stem from the establishment of a special legal regime for DFAs that differs from the legal framework governing securities. The resulting dualism in legal regulation has created conditions for regulatory arbitrage. Issuers opt for DFAs due to lighter regulatory burdens, while investors face limited protection and heightened risks. Recognizing the need for reform, the Bank of Russia has initiated legislative amendments that remain largely fragmented and do not address the conceptual foundations of DFA regulation. To foster the development of the DFA market, it is necessary to move beyond isolated legislative adjustments and toward a long-term regulatory strategy. Such a strategy should aim to eliminate the dualism of legal regulation for DFAs that possess the characteristics of securities and to promote the broader use of experimental legal regimes as a means of developing innovative financial instruments in the form of DFAs. The authors declare no conflicts of interests.

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