Russia’s Ministry of Telecom and Mass Communications has developed a set of regulations aimed at controlling Initial coin Offerings in the country. The new regulations require firms organizing token sales to guarantee that those investing can sell their tokens back, while coin issuers must prove that they control not less 100 million rubles in a recognized Russian bank account.
Token sales will be in Rubles only
The ministry has published the decree on regulation.gov.ru, the official portal. The draft, officials say, is mainly aimed at regulating tokens sales while protecting investors’ rights. A digital token is defined as “a record in a distributed data system that is created via cryptographic algorithms.”
Kommersant reports that according to the draft, companies conducting Initial Coin Offerings are obliged to guarantee they can buy back their digital tokens at normal prices and startups must have at least 100 million rubles ($1.7 million) in a Russian bank. Tokens will be sold only for rubles. The draft also requires companies taking advantage of crowd-funding through ICOs to be duly registered and licensed to issue cryptos in the Russian Federation. They may apply for special accreditation by the Ministry of Communications (on voluntary bases).
Companies may use the monies they raise to finance only those projects which guarantee that they can repurchase their tokens. That is, the funds raise must be invested in only those projects promised during the sale. Compliance will thoroughly be monitored by various firms that the ministry will contract.
These new regulations have faced criticism from various representatives of the cryptocurrency industry for leaving out some vital aspects related to token sales. For instance, the document fails to mention anything about presales which give investors the chance to purchase tokens at lower rates. The lock-up option which prohibits reselling coins for a specific period isn’t mentioned either.
Eastern Europe takes up to 22% of the funds raised in token sales
Russia’s crypto community is now saying that the regulations aren’t synchronized with the new legislation introduced in Duma and that they go too far. The Executive Director of the Association of Cryptocurrency and Blockchain in Russia, Mr. Arseniy Shteltsin, said that “Minicomsvyaz shouldn’t be managing such financial matters.”
Two bills geared towards regulating Russia’s digital economy have so far been filed in the country’s parliament. The law “On Digital Financial Assets” that was introduced by the Ministry of Finance legalizes ICOs and other cryptocurrency-related activities.
Critics fear that this new draft prepared by the Ministry of Communications is going to force Russian firms to seek more favorable jurisdictions elsewhere to organize their ICOs. “We have not seen a single Initial Coin Offering in Russia. They are all conducted abroad,” Kommersant quotes Artem Inyutin, TMT Investments’ managing partner.
East-West Digital News and ICO Bench recently conducted a study which revealed that up to 17 percent of all pre-sales and ICOs in 2017 are accounted for by companies from Eastern Europe. The authors of the study identified 237 firms from that region which attracted 22 percent of the funds (about $1.2 billion) that were raised via Initial Coin Offerings. According to the study, 130 of these companies were from the Russian Federation.
