Russia is drawing up rules about how to conduct initial coin offerings (ICO), breaking ranks with China after Russian President Vladimir Putin signaled his approval for digital currencies.
While China slapped a blanket ban on ICOs this month, the government in Moscow plans to regulate cryptocurrencies like securities rather than outlawing them, Russian Minister of Finance Anton Siluanov told reporters on Friday.
That marks a full reversal from his ministry’s proposal last year to punish people who use digital currencies with up to seven years in jail.
Appetite for the instruments has been growing ever since Putin in June met with the founder of the world’s second-largest cryptocurrency after bitcoin and gave his blessing for Russia to develop blockchain, the technology underlying bitcoin.
A consortium of lenders including Sberbank PJSC is seeking to use the technology to cut costs, while a presidential aide last month announced plans for an ICO.
By contrast, China’s central bank has ordered all fundraising efforts related to ICOs — which have raised at least US$1.25 billion globally so far — halted immediately, a decision that might have an effect on investors who had participated in at least 65 of the projects by mid-July.
Chinese regulators have also decided to close domestic cryptocurrency trading platforms, Caixin reported, citing unidentified people close to the nation’s Internet financial risk prevention team.
“The state certainly understands that cryptocurrencies are a reality, there is no point in prohibiting them,” Siluanov told reporters in Moscow. “It is possible to regulate them, so the finance ministry will draw up a bill by the end of the year.”
That reality was not always apparent in Russia. Before Putin’s meeting with Vitalik Buterin, the Russian-Canadian founder of ethereum, the legal status of cryptocurrencies was unclear.
Since then, a company co-owned by the president’s Internet ombudsman, Dmitry Marinichev, has announced a plan to raise US$100 million in an ICO to fund a domestic digital currency-mining operation.
Herman Gref, Sberbank’s Tesla-driving chief executive officer, has put the weight of Russia’s biggest bank behind a modified ethereum protocol dubbed “masterchain” to make interbank money transfers safer and faster.
However, not all Russian officials are believers.
Bank of Russia Governor Elvira Nabiullina on Friday said at the same forum that there was “gold fever” surrounding digital currencies and said that they should not be used as a surrogate for money.
Regulators around the world have expressed concerns with ICOs.
The Canadian Securities Administrators last month said it would decide whether an ICO should be considered an offering of securities on a case-by-case basis.
To do an ICO, entrepreneurs typically post a white paper online outlining their idea, then offer supporters the opportunity to buy tokens — typically with a cryptocurrency like bitcoin — to finance the project. The tokens can trade on online exchanges, where some of the market values have swelled to more than US$1 billion.
The relative ease of doing an ICO has let to multiple scams, with many issuers simply copying the offering documents of a successful ICOs, such as Tezos.
Last month, the US Securities and Exchange Commission told investors to watch out for scams involving ICOs, a sentiment echoed by the US Financial Industry Regulatory Authority.
Not only scammers, but also hackers can wreak havoc on an ICO.
Last year, a project called the DAO raised hundreds of millions of US dollars before falling prey to hackers. Some ICOs get canceled or end up refunding investors their money.
Meanwhile, European Central Bank (ECB) President Mario Draghi on Thursday criticized a proposal by the Estonian government to launch a state-managed digital currency, reaffirming instead that the euro was the only valid money in the euro area.
A rise in popularity in cryptocurrencies has been worrying the ECB, which has said they could in theory erode its control over the supply of money.
Estonia became the first European country to openly discuss the prospect of a digital currency managed by the government and offered to the nation’s more than 20,000 e-residents — foreign entrepreneurs who open a firm in the country via the Web.
Draghi’s comments come as the status of the euro is called into question in Italy, where an opposition party has proposed that the government issue small-denomination, interest-free bonds to pay suppliers as a way to circumvent a ban on currencies other than the euro.
“I won’t comment on the Italian intention, but I will comment on the Estonian decision: No member state can introduce its own currency,” Draghi said in response to a question during his regular news conference. “The currency of the eurozone is the euro.”
The idea for the “estcoin” came from Kaspar Korjus, the head of Estonia’s e-Residency project. The Tallinn government is seeking feedback online.
Additional reporting by Reuters
US sports leagues rushed to get in on the multi-billion US dollar bonanza of legalized betting, but the arrest of an National Basketball Association (NBA) coach and player in two sprawling US federal investigations show the potential cost of partnering with the gambling industry. Portland Trail Blazers coach Chauncey Billups, a former Detroit Pistons star and an NBA Hall of Famer, was arrested for his alleged role in rigged illegal poker games that prosecutors say were tied to Mafia crime families. Miami Heat guard Terry Rozier was charged with manipulating his play for the benefit of bettors and former NBA player and
The DBS Foundation yesterday announced the launch of two flagship programs, “Silver Motion” and “Happier Caregiver, Healthier Seniors,” in partnership with CCILU Ltd, Hondao Senior Citizens’ Welfare Foundation and the Garden of Hope Foundation to help Taiwan face the challenges of a rapidly aging population. The foundation said it would invest S$4.91 million (US$3.8 million) over three years to foster inclusion and resilience in an aging society. “Aging may bring challenges, but it also brings opportunities. With many Asian markets rapidly becoming super-aged, the DBS Foundation is working with a regional ecosystem of like-minded partners across the private, public and people sectors
BREAKTHROUGH TECH: Powertech expects its fan-out PLP system to become mainstream, saying it can offer three-times greater production throughput Chip packaging service provider Powertech Technology Inc (力成科技) plans to more than double its capital expenditures next year to more than NT$40 billion (US$1.31 billion) as demand for its new panel-level packaging (PLP) technology, primarily used in chips for artificial intelligence (AI) applications, has greatly exceeded what it can supply. A significant portion of the budget, about US$1 billion, would be earmarked for fan-out PLP technology, Powertech told investors yesterday. Its heavy investment in fan-out PLP technology over the past 10 years is expected to bear fruit in 2027 after the technology enters volume production, it said, adding that the tech would
YEAR-END BOOST: The holiday shopping season in the US and Europe, combined with rising demand for AI applications, is expected to drive exports to a new high, the NDC said Taiwan’s business climate monitor improved last month, transitioning from steady growth for the first time in five months, as robust global demand for artificial intelligence (AI) products and new iPhone shipments boosted exports and corporate sales, the National Development Council (NDC) said yesterday. The council uses a five-color system to measure the nation’s economic state, with “green” indicating steady growth, “red” suggesting a boom and “blue” reflecting a recession. “Yellow-red” and “yellow-blue” suggest a transition to a stronger or weaker condition. The total score of the monitor’s composite index rose to 35 points from a revised 31 in August, ending a four-month
RSS