Hybrid digital rights: a DFA and a utility right inside a single record

A hybrid digital right is not a separate instrument and not an "improved DFA", but a legal construct in which a single ledger record simultaneously includes a digital financial asset (DFA) and another digital right, most often a utility right. The category is set out in the law on digital financial assets (31.07.2020, No. 259-FZ), article 1, and it works above all as a rule on the applicable regime: the DFA component is governed by the rules on DFAs, the utility component by the rules of the law on investment platforms (02.08.2019, also No. 259-FZ, article 8). For the investor this means that what is bought is not "one asset with two functions" but a bundle of claims against different obligors, claims that may be performed differently, valued differently and extinguished at different moments.

Why a hybrid form was needed at all

Digital rights as a class are described in article 141.1 of the Civil Code: they are contractual and other rights whose content and terms of exercise are determined by the rules of an information system. Hence their main property: the rights do not exist "in thin air" but inside a specific system that has an operator and a rulebook.

When the legislator placed DFAs and utility rights under different laws, issues that were mixed in their economics ended up between regimes. A typical example of the intended design: a monetary claim against the issuer plus the right to demand the transfer of a thing or the provision of a service. The hybrid category made it possible to structure such an issue without sawing it into separate instruments, and at the same time to state whose rules apply to which part.

What exactly you are buying

The analysis of a hybrid always begins with the question of who the debtor is. The DFA part is, as a rule, a monetary claim against the issuer: the issuer is obliged to pay when the conditions described in the issuance decision occur. The utility part is a claim to have a thing transferred, an exclusive right transferred or a service provided; it is performed by whoever has assumed that obligation, and performance depends on that party's operating capacity, not on whether there is money in the account.

A non-obvious consequence follows: the quality of a hybrid is determined by the worst of its components. The monetary part may be secured, while the delivery part may run up against a production cycle, a licence or raw materials. Analysing the obligor for each part is the same work as analysing corporate debt on the bond market, only without a rating, without a public default history and without an exchange price as a second opinion.

How a hybrid differs from familiar instruments

A share carries a stake in the capital and corporate governance rights; a bond carries a maturity, a coupon and a place in the creditor ranking in bankruptcy. A hybrid digital right has neither of these by default: its content is defined entirely by the issuance decision and the rules of the information system. A comparison with the equity market is useful here by way of contrast: there the terms are standardised by practice and regulation, whereas in a hybrid each issue is read from zero.

The accounting side is a separate matter. If the utility part gives the right to use a thing, a right-of-use asset may arise in the holder's financial statements — the right-of-use asset entry describes how such a right reaches the balance sheet. This matters for corporate buyers: the economics of a deal and its reflection in the accounts diverge more often than it seems.

How to exit a hybrid

Hybrid rights circulate inside the information system under its rules: transactions are made through the operator, the range of possible acquirers may be restricted, and a transfer may require consent. An exchange order book, continuous quotation and a closing price are not to be expected here, so an "exit" usually means one of two things: waiting for the obligation to be performed, or finding an acquirer within the system. The mechanics of transactions in the utility part are covered in detail in the article on utility digital rights — a hybrid inherits them in full.

Checklist before buying

Step 1 — read the issuance decision and write out each component separately: who the debtor is, what the debtor is obliged to do, under which conditions and by what deadline.

Step 2 — check whether the information system operator or the investment platform operator is entered in the relevant register of the Bank of Russia. Outside the register the construct does not receive the protection it is designed to rely on.

Step 3 — find out the transfer rules: whether admission is needed, whether qualified investor status is required, whether a transfer outside the system is permitted.

Step 4 — understand the procedure for performing the utility part and the consequences of non-performance: what happens if the thing is not transferred or the service is not provided, and whether the monetary claim survives in that case.

Step 5 — check the tax side against the current wording of the rules. Specific rates and thresholds are deliberately absent from this article: the platform inserts legal constants from its own database with a reference to the source, and for hybrid rights the tax treatment depends on the nature of the income from each part. General definitions are collected in the glossary.

What this article does not contain

The platform has no data on specific hybrid issues in circulation, their operators or their terms, so there will be no analysis of real examples here — that would be invention, not analysis. If you need an instrument that is comparable in its economics and at the same time publicly observable, it makes more sense to look at funds and the debt market, where there is a price, disclosure and a payment history.