05 Dec 2022
Russia completes largest ever digital asset transaction using Chinese Yuan
According to Lighthouse, the first DFA operation with foreign currency became the largest placement in the domestic market for digital financial assets.
The first yuan-denominated digital asset deal in Russia
Digital financial assets (DFAs) involving the Chinese Yuan were launched for the first time in Russia on December 1st after receiving approval from the country's Digital Financial Asset authority.
The project's execution company, Lighthouse, said the agreement included issuing tokens backed by commercial debt. The yuan exchange occurred on a platform built by Lighthouse, which the Bank of Russia approved in March as one of the “information systems operators” permitted to manage digital financial assets.
According to Lighthouse, the first DFA operation with foreign currency became the largest placement in the domestic market for digital financial assets.
The fintech company explained that the issued tokens have a 29-day maturity and an interest rate of 4%, contrasting favorably with short-term lending in rubles, which carries an interest rate of 9-10%. It was also mentioned that issuers face less risk of loss due to currency fluctuations when using DFAs.
Lighthouse's general manager, Denis Iordanidi, has stated that the new financial instrument will allow for low-cost, short-term investments that won't have to compete with the more established bond market.
Russia's crypto policies range from outright rejection to enthusiastic embrace
The recent Russian move was foreseen back in November. Reports have surfaced that Sberbank, the largest bank in the country, may soon begin issuing bonds denominated in Chinese currency.
During that period, Sberbank's First Deputy Chairman, Alexander Vedyakhin, discussed the possibility of issuing bonds in the Chinese Yuan. He added that bond issuance quantities and schedules would be set according to market conditions.
Despite a previous ban on all crypto transactions, officials in Moscow are looking to legalize crypto payments in cross-border settlements and promote the use of the ruble and the national currencies of partners like China in international trade.
The main reason is to lessen Russia's reliance on the U.S. dollar and the euro, which the West has restricted because of the war in Ukraine.
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