Crypto news

After classic brokerage accounts for Russian investors were effectively cut off from the U.S. stock market in 2022, the most enterprising part of market participants found a workaround. This refers to tokenized stocks and crypto derivatives on foreign platforms. These instruments allow earning from fluctuations in the quotes of American giants, using cryptocurrency for settlements. However, experts are divided on how safe, widespread, and legal this method is.

Scale of the Phenomenon: From Mass Trend to Narrow Niche

Estimates of the popularity of this instrument vary dramatically. Igor Plotnikov, Executive Director of Millpay, believes that tokenized stocks on platforms such as Bybit, Binance, and Deribit are in high demand among Russians, especially among active traders and those who have long worked with digital assets. The current market situation, where a strong revival in the stock market is observed against the backdrop of a downturn in the crypto market, only fuels interest. As indirect evidence, he cites lively discussions in specialized communities and high traffic on exchanges.

On the other hand, Alexander Nam, Vice President for Digital Assets at MTS Fintech, and Yaroslav Kabakov, Director of Strategy at IC Finam, assess the prevalence of the method much more cautiously. They describe trading U.S. stocks via cryptocurrency as the domain of a narrow circle of experienced players, an exclusively niche practice. The lack of precise, open statistical data makes it impossible to determine unequivocally who is right.

Triple Blow: Legal, Sanctions, and Infrastructure Risks

In assessing potential threats, experts are unanimous. Yaroslav Kabakov highlights three key categories of risks:

• Legal: complete uncertainty of the legal status of operations and complex tax accounting.
• Sanctions: high probability of account blocking due to Russian citizenship.
• Infrastructure: a tokenized instrument never guarantees legal rights to ownership of the underlying asset.

Igor Plotnikov adds that any tokenized stock is a derivative, entirely dependent on the exchange that issued it. If the platform runs into problems, the trader risks being left with nothing, as they have no rights to the real securities. The legal status of transactions is in a gray area due to the lack of clear regulation.

Fyodor Ivanov, Director of Analytics at AML/KYT operator SHARD, suggests separating risks by platform type. On centralized exchanges, difficulties are related to compliance, which has become too demanding for users with Russian passports. On decentralized platforms, the analyst sees no particular risks beyond the standard loss of funds due to high volatility. The main problem, in his opinion, arises when trying to "bring" such funds back into the Russian regulated framework: it is extremely difficult for a bank to explain their origin.

Looking to the Future: Legal Digital Financial Assets Instead of Gray Derivatives

Experts agree that the future lies with legal instruments within the national financial system. Yaroslav Kabakov believes that legislators will bet on licensed digital instruments, and operations through uncontrolled foreign crypto exchanges will not be supported. Alexander Nam specifies: investors will likely be offered Digital Financial Assets (DFAs) on foreign securities, tokenized RWAs, and various structural solutions. Their active development will eventually crowd out the gray segment of the market.

Igor Plotnikov looks at regulation from a different angle: for him, it is not about crowding out players, but a long-awaited clarification of the rules of the game. He explains that after the law on digital currency comes into force, citizens will be able to legally buy tokenized assets with cryptocurrency. Restrictions will only affect the use of Russian payment infrastructure. That is, buying USDT for rubles on a domestic licensed platform, transferring them abroad, and purchasing assets there is legal. However, buying them on a foreign exchange directly with rubles will be prohibited, although technically this is already impossible, as foreign platforms do not accept rubles.

My analysis: Trading U.S. stocks via crypto derivatives is a high-risk but effective tool for experienced market participants who are aware of all the consequences. However, with the development of regulation and the emergence of domestic DFAs on foreign assets, the "gray" zone will likely shrink. Investors considering this path should carefully weigh not only the potential returns but also the complete legal vulnerability of their investments.