The Central Bank reminds about buying digital investment products: digital financial assets, cryptocurrency, and stablecoins require caution because it is often difficult for the consumer to understand the full set of risks in advance. This was stated by Alexey Guznov, State Secretary and Deputy Chairman of the Bank of Russia, at a session of the St. Petersburg International Legal Forum.
Why Digital Products Attract Special Attention From the Regulator
According to Alexey Guznov, a new financial instrument often turns out to be complex even for a prepared client. This also applies to digital financial assets, which already occupy a significant share of the market: as the Central Bank representative noted, their volume is comparable to 16% of the bond market.
Simply put, DFAs are considered here as a digital form of an investment instrument. They should not be confused with cryptocurrency and stablecoins: all these products require caution, but they are structured differently and carry different risks for the buyer.
A separate block of risks is associated with cryptocurrencies and stablecoins. Such products may seem like a convenient way to invest, but investments in them require an understanding of the terms, yield mechanics, and possible losses. Guznov emphasized that it is precisely because of this complexity that a special approach to regulation is needed.
“New financial instruments are complex. This applies to digital financial assets as well as cryptocurrencies and stablecoins. The main problem is that it can be difficult for a person to assess all the risks in advance,” noted Alexey Guznov.
When a Client Gets a Complex Scheme Instead of a Deposit
A representative of the Bank of Russia recalled situations where citizens are offered more complicated solutions under the guise of a familiar banking product. The income calculation formula sometimes takes up several lines, and it is not easy to understand even for people with an economic or legal background. In practice, several signs should raise concerns:
- A complex income calculation formula.
- Non-obvious contract terms.
- The possibility of losing invested funds.
In such structures, the client may expect a profit but end up receiving only the initial amount. In some cases, as Guznov warned, a person risks losing even that. The main risks for buyers of DFAs and similar complex products are usually associated not only with the asset price but also with how the deal itself is structured.
- Market risk: market conditions may change so that the expected yield disappears.
- Technological risk: the digital form of the product adds dependence on technical infrastructure.
- Fraud risk: the complexity of the product may make it difficult to quickly understand how bona fide the offer is.
- Liquidity risk: it may be difficult for the investor to exit the product on the terms they need.
Before buying a digital financial asset, it is important not to focus only on the promised yield: first, you need to understand the terms, the calculation formula, and the scenario in which you could lose money.
Such caution is important not only for digital products. Any security, stock, bond, or derivative financial instrument carries its own risk, and an asset on the balance sheet and a real investment product for a private client are not the same thing. If you break this down by type of instrument, you get a simple guideline:
- Stocks and other securities — the main risk is related to market conditions; the result depends on the market situation.
- Bonds — inflation and contract terms can affect the final yield.
- Derivative financial instruments — much is determined by the formula and terms of the deal, so it is especially important for a private client to understand the product mechanics.
Digitalization Has Accelerated the Market but Increased Complaints
Alexey Guznov also drew attention to the dual effect of digitalization in Russia’s financial sector. On the one hand, large banks, using scoring models, have been able to make loan decisions in a matter of minutes. For the client, this is convenient: the wait is shorter and access to services is easier.
On the other hand, fast digital processes have exacerbated the problem of unfair disclosure. Regulatory authorities have started receiving complaints from citizens who believed they were misled when signing up for financial products.
The answer was the “Cooling-Off Period” mechanism. It gives the consumer time to reconsider the decision and understand whether they really need a loan or another complex product. According to Guznov, this approach should help people avoid making financial decisions under pressure.
Consumer protection issues were discussed at the session “Digital Financial Market: Who Will Protect the Consumer?” The topic became part of the program of the St. Petersburg International Legal Forum, which is being held at the Expoforum Convention and Exhibition Center from June 24 to 26.
Judges, lawyers, business representatives, and media from 80 countries are participating in the forum. The platform’s motto — “Time to Be in the Right” — emphasizes the importance of timely response to internal and external challenges, as well as the significance of equality and mutually beneficial cooperation in the global system of relations.
