Moscow, Russia. The world’s 6th largest economy by nominal GDP is set to get its first Initial Coin Offering (ICO). Level One, a Russian, firm is seeking to use the ICO proceeds to develop new tokenized online services.
Contrary to expectation, Level One is an established Russian firm that seeks to adopt the Blockchain technology as a business module. The commercial enterprise is the face behind the most famous commercial public lecture hall in the country. The sale is expected to start mid-year.
Mystery in the ICO Motivation
Financial analysts in Russia and abroad believe that the announcement has a lot to do with the French President, Emmanuel Macron’s, visit to the Old Russian capital, St. Petersburg. It is believed that with the concessions signed between President Putin and Macron, the ICO can attract European investors whose participation is vital for any Russian venture success. Additionally, the ICO is perceived to be taking advantage of the German reinvigorated relationship with Russia after Chancellor Angela Merkel’s visit to Moscow, earlier this month.
With the new French and German presidents on their side, in a show of political defiance to the USA president, Russian investors are more confident of the Europeans’ support for their businesses and the Level One ICO happens to be the first in a series of many.
ICO Sale on the Face of Strict Regulation
On another standpoint, the Duma-Russian Parliament, had unanimously passed a bill dubbed “On Digital Financial Assets.” This motion was a part of an ongoing policymaking process for Cryptocurrencies, ICOs, and Blockchains. Last week, Kremlin requested the Duma to fast track the process to enable startups to understand their tax obligations and get clarity on how to operate. Under the new law, Cryptocurrencies are deemed to be property rather than currencies. The law went ahead to differentiate ICO from Cryptocurrencies by stating that ICO is controlled by one issuer, unlike the Cryptocurrencies, which are decentralized.
In the light of the government regulations, the Level One ICO sale will be piloted by the National Settlement Depository (NRM) and the Sberbank CIB Bank of Russia. These two institutions are mandated with the task of ensuring that the Bank of Russia’s regulations are followed to the letter based on the Acts of the Duma. The two companies are part of the Moscow Stock Exchange Group, the leading market for Russian Stocks.
The NRM is the transaction custodian tasked with, registering and recording the sales, and storing the digital coins. Meanwhile, the Sberbank CIB bank is the anchor investor and the primary organizer of the Level One Token Sale.
Establishing a Link Between ICO Market and the Stock Market
It is clear that the Russians are finding a link between the conventional stock markets and the ever-growing ICO trades in a bid to establishing a connection. Further, it can be deduced that the Russians are creating a healthy environment for their businesses to acquire capital using the conventional stock trading modules under the guidance of the State laws. This is a pilot program to test the waters in terms of market appeal, the viability of the ICO and feasibility of the state laws.
The unique ICO sale may inform other Governments, Central Banks, and the Regulatory institutions on the best approach to streamline ICO markets.