Russia’s Ministry of Telecom and Mass Communications (MinComSvyaz) has created regulations for issuing crypto tokens in Initial Coin Offerings (ICOs).
ICO Regulations Have Been developed
Russia seems to be preparing regulations that concern blockchain technology and Initial Coin Offerings, holding back from banning them altogether, as the country is looking into the financial advantages of ICOs.
Also, Russia is giving its national currency, the Ruble, an important role in the ICO process. According to local news outlet Kommersant, Russia’s MinComSvyaz has drawn up regulations for ICOs, publishing the paper (in Russian), which is at this time in the public debate stage.
Some of the most important points stated in the document are the following:
- ICO coordinators have to be accredited for 5 years;
- Accreditation is proposed to be voluntary and managed by MinComSvyaz;
- ICOs must be registered in the Russian Federation;
- Registered capital has to be a minimum of 100 million rubles (1.7 mill USD);
- Must have license to develop, produce, and distribute cryptographic services;
- Must have Russian bank account for transacting the capital raised from ICO;
- Digital tokens must be issued in rubles only (cashless settlement).
- ICO organizers are obligated to support buy-backs from investors at the nominal price using the earnings that resulted from the token sale.
Finally, these regulations must be imposed by the agreed licensed companies, which have to be accredited by MinComSvyaz.
A Draw Back or A Step Forward?
According to MinComSvyaz’s document, digital tokens are seen as entries in “distributed information systems” generated though “cryptographic algorithms.” These entries signify digital units of account, which give rights to accept digital tokens at their initial offering price.
Some fear that such measures could discourage startups from holding ICOs in the country, but so far, there have been no actual ICOs which have been officially held in Russia.
Furthermore, the document does not talk about some important aspects like the management of pre-ICOs, states Artyom Inutin, Head of Investments at TMT Investments. This process often consists of supposed “conditional tokens” that early investors purchase at discount price, though with major risk.
MinComSvyaz “must not manage the processes within these financial platforms,” said Inutin. Consequently, the investor is certain that such regulations would hinder ICOs in Russia.
“This is what I’m afraid of,” he adds. “Documents often leave room for double interpretation and this could hurt the ICO process.”
Moreover, the guidelines do not deal with vesting schedules or “lock-ups,” where ICO organizers and early investors are forbidden from selling tokens on the market earlier than a set date in the future.
Head of Russia’s Association of Cryptocurrency and Blockchain (RACIB), Arseniy Sheltsin said:
“It’s hard to comment on these regulations in any shape or form, because they are disconnected from reality.”
From the document, it appears that the money must be gathered so that it can then be restituted instead of putting these funds into internal business development and investment, he adds.
“The document uses inaccurate terminology, which can result in conflict,” explained Sheltsin. “Nor does it correspond to existing regulations.”