The Moscow Stock Exchange is preparing to introduce a digital financial asset (DFA) for real estate assets in 2024 to make investments in the sector more accessible, local media reportedciting the exchange’s director of digital assets, Sergei Kharinov.
The new DFA is expected to lower the barrier to entry for real estate investment, allowing a wider range of investors to participate in the sector.
The National Settlement Depository (NSD) will oversee the issuance of the DFAs that will be traded on the Moscow Stock Exchange. The NSD is one of ten operators authorized by the Bank of Russia to supervise the issuance of DFA.
The other operators include traditional financial entities such as Sberbank of Russia, Alfa Bank, Lighthouse and St. Petersburg Exchange, as well as Web 3 companies such as Blockchain Hub.
Digital financial assets
Unlike traditional financial instruments such as stocks or bonds, DFAs are blockchain-based digital rights that are recorded as program code on a distributed ledger. Essentially, they are tokenized versions of a real-world asset – in this case, a real estate property – on a blockchain.
Although DFAs cannot be used as a means of payment under Russian law, they offer investors unique benefits, including the ability to divide the value of a security into multiple tokens and conduct programmable transactions.
The issuance of real estate DFAs is expected to benefit both builders and investors. Builders can raise money directly in addition to conventional bank financing, while investors gain access to real estate investments with a lower entry barrier.
According to the report, some developers have already expressed interest in launching real estate DFAs and are currently in discussions with the Moscow Stock Exchange to clarify the process.
These financial instruments are expected to appeal to qualified and non-qualified investors, allowing people with limited capital to participate in the real estate market. DFAs can act as a hedge against inflation and give investors the opportunity to save for future real estate purchases.
Russia has previously issued DFAs for real estate assets that offered minimum returns and additional profits due to the increase in the cost of square meters in residential complexes. These were previously available to retail and non-qualified investors.
However, the report states that it is unclear whether retail investors will have the same level of access to real estate DFAs on the exchange this time around.
The post of Moscow stock exchange looking to issue tokenized real estate assets by 2024 first appeared on CryptoSlate.