Russian Minister of Communications Suggests ICO Accreditation
RegulationBit News Today2 min read
The Russian Minister of Communications has floated the idea of requiring legal accreditation for Initial Coin Offerings (ICOs). The minister noted that new legislation may be needed to regulate ICOs, as the existing legal framework does not provide for some of the unique aspects of crypto tokens.
ICOs have surged in Russia in the past several years. A survey of Russian crypto investors conducted earlier in 2018 shows that over a quarter of respondents have invested in an ICO. ## Government Concerned About Investor Risks
The Ministry's concern stems from the risks that ICOs pose to individual investors, many of whom may not fully understand what they are buying. Tokens are not regulated in the same way as securities, and their value can fluctuate wildly.
There are indications that the Russian Ministry of Finance is developing plans to regulate ICOs. Last year, the head of the Russian Ministry of Finance said that ICOs would need to be carefully regulated, hinting at potential requirements for accreditation or registration, but these plans have not yet been realized. ## Effect of ICO Regulation on Market
It is unclear what form or requirements ICO accreditation may take. Some geographically-limited ICOs have emerged, accepted only by investors in certain regions, or require permanent residency. Blockchain projects may need to raise funds only from institutional investors or rely on bank financing instead.
Legal experts are split over how regulation will impact the crypto economy. Some expect that accreditation or registration for ICOs will make them more secure. Others fear that registering with the government could make ICOs more vulnerable to corruption, and that token-based projects could move to more crypto-friendly countries. ## Impact of Accreditation Pressure
The minister's proposal comes as Russian regulators increasingly crack down on crypto investments. Last year, Russia banned the use of cryptocurrencies as payment for goods and services. This year, Russia is expected to pass legislation making it illegal to buy cryptocurrencies with rubles, although peer-to-peer transactions are still allowed.
These restrictions are likely to have an impact on startup funding in Russia, where an estimated one in three businesses operate in the crypto economy and where half of businesses have at least considered using cryptocurrencies. Business groups are already urging the government to rethink its anti-crypto stance.
Regulatory pressure may cause ICO-related startups to move to more crypto-friendly countries. Some are expected to remain in Russia, seeking ways to comply with regulations.
Recent talk of regulation among Russian authorities may impact small startups in particular, as they are less able to absorb the costs of compliance or to move their projects to other regions. However, the fate of Russia's burgeoning crypto economy remains uncertain as new regulations take shape.
