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BlockchainBusiness & Finance

Russia Moving Forward in Regulations with Registry of Whitelisted Crypto Companies

The list of trusted companies will allow Russian and foreign market participants to base their work on trusted organizations and minimize the risk of fraud in the creation and development of Russian or foreign business in the field of mining, trading with cryptocurrency, blockchain technology and ICO.

The Russian Association of Cryptocurrencies and Blockchain (RACIB) has launched a registry of whitelisted companies that offer crypto-related products or services. These registered whitelisted crypto companies include firms from crypto mining, crypto investment and trading, marketing, legal, training, and initial coin offerings (ICOs). All the major cryptocurrencies including bitcoin are struggling to cover up the losses due to the price drop in the crypto market. More than 70% of the losses were due to the scams in the crypto market, fake cryptocurrencies and fake ICOs. According to a recent study, more than 80% of the cryptocurrency companies who launched their ICOs were scams. Another recent report from Techcrunch claims that more than 1,000 projects and ICOs are already dead in 2018, and last year in 2017, these failed and dead ICO projects cost about $1 billion.

List of dead or scam crypto projects

Every new startup has a certain set of rules which they have to follow and they can also set their own standard of rules. One major problem for every startup is managing the funds, especially when it is a crowdfunded project. When a startup has too much fuel too quickly, the resulting conflagration ends up consuming both the company and the founders, and left is a very little help for the investors. Two sites that are actively monitoring failed crypto projects, Coinopsy and DeadCoins, have found that over a 1,000 projects have failed so far in 2018.

RACIB’s whitelist of crypto companies

The Russian Association of Cryptocurrencies and Blockchain (RACIB) has revealed that individual investors and legal entities in the country have lost more than 270 million rubles (US $4.3 million) from crypto-related investments organized by scammers and incompetent companies. RACIB explained that the association check for few certain criteria related to the crypto organization in order to assign them the status of whitelisted crypto companies. The criteria include financial sustainability, experience and business reputation, nature of the business, lack of judicial judgments, availability of licenses and certificates (if necessary) and no arrears of taxes and fees.

These companies are trusted organizations which have already passed the verification procedure. Any legal entity in Russia wanting to be included can apply online. The average period for document review is 10 days.

Additional testing and certification in three areas are already in the works, the association revealed. The first is a “certification for traders of crypto assets.” The second is a “certification for mining equipment suppliers” and the third is a “certification for mining farms.”

Russian crypto bill

Russia’s president Vladimir Putin has issued orders regarding the regulation of cryptocurrencies, initial coin offerings (ICO), and cryptocurrency mining. As a president, he understands that this is the time for changes being made to the Russian legislation to regulate cryptocurrencies and tokens. Mining operations will also be registered and taxed. Putin ordered the prime minister, and the central bank governor will be responsible for completing the orders by July 2018. The legal framework for the regulation of cryptocurrencies and ICOs in Russia is still in the preparation stage. The bill “On Digital Financial Assets” passed the first reading in the State Duma in May.

3 crypto bills passed by the state Duma

The lower house of Russia’s parliament, the Duma, has accepted and approved on first reading, three pieces of legislation tailored to regulate different aspects of the crypto ecosphere in the country. State Duma has approved the legal texts, voted almost unanimously and will open the way for legalization of cryptocurrencies in the Russian Federation, including their exchange and circulation under certain conditions. Three bills that were passed by the Russian parliament are:

  1. Digital financial assets

    This bill was prepared by the finance ministry. It regulates the relations arising from the creation, issuance, storage, and circulation of digital financial assets. The draft also establishes the exact procedures for conducting crypto transactions and concluding smart contracts, including the exercise of rights and the performance of obligations. Digital financial assets include cryptocurrency and token. These assets are not legal tender in the Russian Federation. Tokens can have a single issuer, while cryptocurrencies can have multiple issuers, like the miners. Both can be exchanged with rubles and foreign currencies under rules determined by the Central Bank of Russia (CBR). They will not be considered a mandatory means of payment, account, and transfer like the ruble, but individuals and businesses will be able to use them for payments within the frame of the law.

  2. Attracting investments using investment platforms

    Again the bill was prepared by the ministry of finance. It regulates specifically crowdfunding and crowd investing in Russia. The draft of the bill reads that both legal entities and individual entrepreneurs can be involved in such activities and prescribes the norms that the organizers of digital fundraising should abide by. According to the provisions, private citizens can participate in crowdfunding without any registration but the investment platform operators should be registered with the CBR. The bank will also determine the maximum amount that an “unqualified investor” can spend on a single project as well as and the limit of their yearly investments in digital tokens.

  3. Digital rights

    This bill amends the Russian civil law. It introduces basic provisions allowing legislators to regulate the market of tokens and cryptocurrencies and creating conditions for digital transactions. The text develops the legal concept of “digital right” to define tokens. Only tokens with significant economic meaning will be recognized as digital rights, unlike loyalty points or virtual coins used in online gaming, for example; A holder of a “digital right” is described as a person with unique access to the coin’s digital code. Besides regulating the circulation of tokens and the execution of token transactions, the law is also expected to ensure judicial protection for their owners. The introduction of digital rights creates a legal basis for taxation of economic activities also related to token sales.

Muhmmad Furqan

Furqan is a financial markets expert. A regular trader of cryptocurrencies and hold some investments in Bitcoin, Stellar, IOTA and OST. Contributes with latest industry insights. Contact the editor at editor.opinions@blockpublisher.com

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