Russia Prepares To Legalize Bitcoin in 2018
Jul 29, 2017 Posted / 4947 Views
Russia looks to move to legalize cryptocurrencies by 2018 .The article frames the acceptance of bitcoin as a way to clamp down on money laundering but could be a way for Russia to escape from a punitive financial system over the long run.The members of the governmental interdepartmental working group assessing the risks of cryptocurrency turnover in Russia have begun to discuss the possibility of introducing amendments to the civil law that will allow ICOs to be held in the Russian Federation. The billwillattempt to ‘define the nature of cryptocurrencies and their status, as well as basic principles for the cryptomarket operation. Elina Sidorenko, head of the Russian working group of cryptocurrency riskassessment, opines that, ‘the government should develop legislative mechanisms for contract verification, user identification, and protection of token holders rights.’ Facilitating ICOs and the usage of cryptocurrencies can help secure the crypto scene and develop safer practices, reducing the risk of nefarious projects.
According to reports, Russian market participants believe that the legalization of cryptocurrencies can help both large companies and small businesses that are searching for investors. The law that would allow them to launch ICOs and cryptocurrency transactions with lower expenses and fees could become a springboard for the Russian economy's take-off. Russia has stated aspirations to follow the Japanese example, which has made digital currencies like Bitcoin and Ethereum legal tender, with the Russian law to be proposed in autumn, but they seem to be going a bit further than Japan.
“As soon as the regulation is introduced, those businesses who want to be legal will have to change their operations. In some cases, those changes will be minimal, like registering as an individual entrepreneur or creating a specifically registered wallet to accept payments,” Sidorenko says.
Which may amount to requiring a license for an ICO, something that may at this stage be far too restrictive considering the very nascent and fast developing nature of the field.
However, there will probably need to be some enforceable guidelines. ICOs, for example, should provide quarterly investors reports, details of their holdings, details of their project progress, futureplans, and so on.
Moreover, most ICOs should be capped, especially if they have an insignificant amount of users or revenue, and there probably needs to be some way of keeping them accountable and incentivized to deliver on their promises.As the field develops, other guidelines will probably become clear too, but there is a danger with any law that it pre-empts, rather than encourages, innovation, especially when a license is concerned. Something which would be very costly, time-consuming, and the licensing body would probably lack the expertise in any event.
Ultimately, regulating crypto practices will help the Russian tech scene to raise capital more safely. With clearly defined rules and processes for ICOs, the companies will be protected from vexatious claims resulting from disgruntled investors, and investors themselves will receive clear guidance on their rights. What’s more, should a listing requirement be enacted, this will help the ICO scene mature, protecting both sides. Withal, having a framework will certainly catapult the Russian tech scene, facilitating safe access to funds whilst also eliminating false projects.
The rapid rise of the Initial Coin Offering (ICO) has driven an investment craze. Somewhat of a lovechild between an Initial Public Offering (IPO) and crowdfunding, an ICO allows a company to raise capital by selling its yet to be released cryptocurrency in the form of tokens (often likened to shares in an IPO). With no current regulatory opinion on ICOs, the hidden dangers of the process are left completely free to ravage unsuspecting or risky investors. From Ponzi scheme potential to fraud, ICOs could have hidden threats lurking under the false promise of rapid, ridiculous, returns.
Further, heavy cross-border charges could prompt a more open cryptocurrency scene in efforts to alleviate some of this. Moreover, there is the opportunity to go in the opposite direction and conduct tax efforts on the transactions, with regulation being the gateway to such an operation.
Lastly, with the transparency and easily traceable nature of cryptocurrencies, using such a system could help eliminate corruption, whilst also strengthening the position of the Communist Party of China economically, as the government would have access to large amounts of data, in real time, enabling the targeting of economic policies and tweaking of broad strategy. Of course, a government controlled cryptocurrency eliminates the ‘decentralized’ trait, a key reason for the development of blockchain technology.
Whilst one must wait with bated breath to see what the Russian regulators cook up, it will be interesting to see whether a soft or hard approach it adopted. Further, the regulation could be a gateway to other rules, from taxation to domestic adoption. Moreover, how the crypto scene reacts will also be interesting, particularly as more fintech firms see ICOs as a golden route to funds, thus the firms are likely to still be shopping for a jurisdiction to call home, with Switzerland currently being the most attractive.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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