Analysis of Some Key points of Russian ICO Guidelines in News

Although, I have not go through any draft rules/regulations as are in news among the crypto community, though, found some key points mentioned in various crypto news articles. Based on the assumption that following points produced are true and will be implemented as it is depicted on some website. Please find below my thoughts on these points and their resulting consequences. Before going forward, it is pertinent to mention that these guidelines are said to strengthen the use of national currency of Russia.

ICO organizers would be allowed for a period of 5 years

Registration of ICO and its organizing team which might include the core team as well as ICO advisory team must file for an approval to be allowed to launch an ICO. It can be assumed that registration process will include cost, time and proper planning. The cost not only in terms of appointing a legal counsel to liaison with the agency involved but, it will waste time and effort of the ICO team to deal with such process. There is no doubt that such rules and regulations bring transparency to the business,will help to ensure AML/CTF compliance of local agencies as well as international body such as FATF.

Therefore, there will be a need for proper time management and planning. However, it is a matter of fact that most of the fund raising startups do not have necessary skills and resources to plan like a business management expert. Thus, it will lead to a new issue of having not only advisers in terms of ICO funding, but a proper business advisory which will help the startup through out their journey to share their experience and advice.

As the accreditation will expire in 5 years, the same process will begin again. So, I assume that the draft must have been augmented with forms annexed.

ICO Registration must be in Russia

So, does it mean that any ICO raising funds must have to registered with Russia. Don’t you think it will cost double to the project.

Registered capital must be at least 100 million rubles

It might be a scary news for entrepreneur who were planning to launch their own project. So, here comes the role of VCs and Private equity funds who may offer you funds only for lucrative offerings. Thus, those projects from the natives will face costly financing from their own VCs.

Must have Russian bank account for transmitting money raised from ICO

Well, most of the ICOs conducted raised funds in terms of crypto currencies. If the point above is considered to be true to the knowledge, than what I anticipate is that, each project will raise funds in their required crypto currency, sell that in the market to raise rubble, and keep that money in the Russian Bank account which must have been regulated by the federal bank of the country. Though, the whole purpose of “Decentralization”, exclusion of middle man etc is at stake. Further, if the funds are placed in the local bank account, those can be freezed, debited at the will of the government. What if, such funds placed in a local bank account will be placed in an escrow account, where in, project can only get money when it has meet some conditions. Nevertheless, if it so, the application of escrow account is a good step to secure the investor (just like capital mkts IPOs where in funds have to be placed in escrow account or the issuer has to pledge some thing or provide guarantee in some jurisdictions). But, how come these escrow services will be for free. Increased Cost again !

Issuing of digital tokens must be carried out in rubles only (cashless settlement).

Surprisingly, after Petro, we will be having crypto rubles. So, this indicate the issuance of national crypto currency, projects would only be allowed to raised funds in terms of rubles, thus, increasing the demand/supply of the ruble. The Bank account stated above might be refered as “Ruble Wallet” encoded with a smart contract to ensure terms and conditions of the projects and project, once achieve their milestone will get funds (Utopia:) ).

What ever it is , I can’t say concrete, as the above mentioned points have come to my knowledge from various news casters, further, these points appears to be mere reflection of the actual draft. However, the whole draft is subject to its acceptability as a rule for russia, once it is passed by the relevant legislation.

Disclaimer: The above article is just my personal thought process and are totally based on perception based on nothing concrete evidence. Thus, readers are allowed to enjoy the article and use it as a yardstick to brainstorm, or comment below for your opinion. But, it should never be taken as legal advice.

Blogger, Technology Evangelist, Management Accountant, , Strategic Adviser and a Capital Market Professional