Sberbank has announced the launch of its first gold-backed digital token. The digital financial asset (DFA) issued by the bank will be pegged to the price of gold and is available to its institutional clients. Russia has legalised investments in DFAs since 2020, however, crypto assets cannot be used for payments within the country.
As part of an effort to offer institutional clients with alternate investment products amid de-dollarisation, Russia’s largest bank, Sber – formerly known as Sberbank – has announced the first issue of gold-backed digital financial assets (DFA).
Solfer, manufacturer and retailer of diversified metals, became the first investor to purchase the DFA that was issued by Sber on December 26. The gold-backed token, whose price and volume are determined by the price of gold on a daily basis, has certified monetary rights. According to the announcement, the bank will issue up to 150,000 gold DFAs, which will be available to purchase by investors until June 30, 2023.
Among the list of potential “high risks’’ for buyers, the bank mentions that these kinds of investment products are subject to “risk of liquidity”. Meanwhile, Alexander Vedyakhin, the first deputy chairman of the Executive Board at Sber, claims that DFAs can be leveraged as an alternative to traditional investment products and can help curb the effects of de-dollarization, which is the result of the economic sanctions imposed by the west on Russia for its invasion of Ukraine. Russia’s largest bank expects institutional clientele on its platform to grow rapidly, and plans to expand its product line of digital financial assets (DFA) in the coming months.
DFAs have been recognised as investment products in the country since 2020. However, in July, Russian President Vladimir Putin signed a bill into law prohibiting digital financial assets to be used as a method of payment, which also includes cryptocurrencies. Earlier this month, members of the State Duma – Russia’s lower house of parliament, held a reading for a draft bill that is designed to regulate the country’s crypto industry. Certain provisions in the bill were made by the Duma’s Financial Market Committee, which suggested reforms to recognise the crypto mining industry and consider using digital financial assets for cross-border settlements.
The amendments were first rejected by the parliament’s legal department who asked the financial committee to consult the central bank regarding the matter. The Bank of Russia (CBR), which has always maintained a strong stance against legalisation of cryptocurrencies, surprisingly agreed to the provisions under the condition that crypto tokens minted in the country will only be sold domestically through authorised exchanges. Under the CBR’s watch, cryptocurrencies will be used for payments in special legal regimes within the country. However, the proposed bill is awaiting full approval from the parliament, which is expected to happen early next year, after which the draft document will go to the desk of President Putin, who will sign the legislation into law.
In June, VTB Factoring, a subsidiary of state-owned banking giant VTB, conducted its first major deal using digital financial assets. The bank acquired a tokenized debt pool of Russian railway engineering company Metrowagonmash, issued by fintech platform Lighthouse.
In November, Dubai Multi Commodities Centre (DMCC), the Middle East’s primary commodities trade authority, partnered with gold-backed digital token issuers ComTech Gold to develop a crypto token pegged 1:1 with physical gold bars. The tokens which can be traded on the commodities exchange, will be deployed on the enterprise grade blockchain, XinFin Protocol (XDC).