Digital Rights Law Shuts Russians Out of Digital Shares in Public Companies

The law “On Digital Rights and Digital Currencies” has come into force, and for private investors its first effect is to draw a line. Russians can buy digital rights to shares, but only in non-public companies. For securities of public issuers, this route is closed. The second novelty concerns the debt market: the law provides for the issuance of debt digital financial assets. In sum: one ban, one permission and one new instrument.

What is allowed and what is not

A digital right to a share is a record of rights to the security in the register of a technology platform, rather than in a conventional depository. For a non-public company, it is a way to raise money without going to an exchange and without a full IPO. For an investor, it offers access to a business that used to be open to a narrow circle.

The restriction does not affect public companies in terms of issuance. For Russian buyers, however, it means that the digital format is unavailable for their shares. The original report does not disclose the motives. The logical reading is that shares of public companies already trade on regulated venues with disclosure requirements and oversight, and the regulator does not want to create a parallel circuit for the same securities. This is an interpretation, not a quote from the law.

The key provisions known so far:

• The law is titled “On Digital Rights and Digital Currencies” and is already in effect.
• Buying digital rights to shares of non-public companies is permitted.
• Russians are prohibited from buying such rights to shares of public companies.
• The issuance of debt digital financial assets is introduced.
• The report does not specify amount limits, investor status requirements or transition periods.

Debt DFAs: what is being added

A debt digital financial asset is similar in substance to a bond or a loan: the issuer receives money and commits to repay it and pay income on agreed terms, while records are kept in digital form. The DFA market in Russia has operated since 2022, when the first issues took place. Now this segment gets a separate legislative foundation.

The available material does not give the parameters of the new debt instruments. It is unknown who will be able to issue them, what restrictions will apply to retail buyers and how the secondary market will work. These details will determine whether the instrument becomes mainstream or stays niche.

What investors and issuers should do

For a private investor, the practical takeaway is simple: before buying a digital right to a share, check the issuer's status. If the company is public, this instrument is closed to you. If it is non-public, it comes with its own risks: there is less information about such companies, and liquidity on the secondary market is, as a rule, lower than for exchange-traded securities.

For non-public companies, the law opens an additional channel for raising capital, but they should choose a platform operator from among those included in the relevant register. For the platforms themselves, the main task now is to wait for the implementing regulations and check their admission and record-keeping procedures against them.

Until the document has been analyzed article by article, treat any conclusions with caution. The next steps are to read the full text of the law, check which exceptions and transitional provisions it contains, and wait for the regulator's clarifications on debt DFAs.