Tokenized Real-World Assets Pose Systemic Challenges, Says Russian Central Bank

The Bank of Russia has warned that though the market of tokenized real-world assets is still in its infancy and does not yet pose significant systemic risks, its expansion could introduce critical challenges.

In a detailed 47-page report, the central bank noted that tokenized assets inherit the risks of their underlying real-world counterparts, such as theft, damage, or loss, which can affect their value and reliability as collateral. It also noted that errors or inaccuracies in describing tokenized assets could create mismatches between the digital tokens and the actual assets they represent.

The report also flagged double tokenization—where the same asset is tokenized on multiple blockchains—as a critical tracking risk. Liquidity concerns were also highlighted, as stress or volatility in token markets could lead to destabilizing investor actions impacting both tokenized and physical asset markets.

According to the report, the involvement of oracles, which provide external data for tokenized asset pricing and quality, presents another vulnerability. The Bank claimed that manipulation or inaccuracies in oracle data, particularly from entities outside regulatory frameworks, could disrupt market stability.

While the market remains small relative to the global financial system, the central bank also warns of challenges related to capital flows into unregulated sectors and heightened exposure of traditional financial institutions to cryptocurrencies.

Despite these risks, the Bank of Russia acknowledged the potential benefits of asset tokenization, such as enhanced liquidity and efficiency in asset management. However, it emphasized that the sector’s current scale is modest and lacks the robustness seen in traditional finance.

This report comes as Russia embraces and pushes to regulate the crypto sector. The country’s Ministry of Finance recently proposed an amendment to its new cryptocurrency mining laws that introduce new tax rules for these activities. Notably, the proposal includes imposing a 15% tax on profits from the process and classifies cryptocurrencies as property for tax purposes.

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