A Russian local news outlet has reported that the country’s central bank planned and successfully conducted an initial coin offering (ICO) trial.
In a news article published by TASS on September 11, an official from Russia’s top bank is quoted as saying that the experimental ICO succeeded though there still were a number of legal issues to look at.
Ivan Semagin is deputy director with Bank of Russia’s Financial Market Development Department. He is reportedly quoted to have said that:
“Within a framework of the central bank’s sandbox, we conducted an experimental ICO on the basis of our existing infrastructure. Technically it was a success, but we still have a lot of legal issues”.
According to TASS, state-owned Sberbank (for which the Central Bank owns 50 percent) and the National Settlement Depository were to collaborate on an experimental technology that would facilitate the issuance of ICOs.
The initiative was to be undertaken on a framework provided by the Central Bank. The publication adds that LevelOne, managers of the largest commercial hall in Moscow.
In addition, reports had projected that the pilot tests would take place before the end of summer.
Semagin made the remarks on the sidelines of the Eastern Economic Forum (EEF) event. The EEF is an annual event that brings together participants from Russia’s Far East regions and the counterparts from the Asia-Pacific region.
The forum brings together leaders from several fields for the purposes of interaction and economic collaboration.
Ivan Semagin was a participant at the “The Far East as a Financial and Offshore Centre” forum. Coincidentally, TASS’ Chief Editor Maxim Filimonov was the moderator of that panel discussion.
The forum comprised of officials from both Russia and China, including journalists. In one of the discussions, the impact of cryptocurrencies and ICOs for the Far East region featured heavily.
It drew a number of reactions and comments especially with regard to what needed to be done to prepare the region in this new digital era.
The discussion heard that cryptocurrencies had become more like traditional shares and futures. Digital assets are already reflecting specific values representative of all levels of business assets.
It was noted at the meeting that adapting to digitalization would help companies located in Russia’s Far East region to reduce counterparty transaction costs. In addition, and more importantly, it would be an opportunity to attract major investors
However, the panelists noted that there were lots of regulatory and infrastructure-related challenges that are directly hindering rapid development and adoption of new digital technologies.
ICO can be a useful technological tool
According to one panelist, Alexey Chekunov, initial coin offerings (ICOs) can be very useful as technological tools that could see a lot of money poured into the region. Chekunov is the CEO, the Far East, and Baikal Region Development Fund.
Chekunov pointed out that the region can adopt an approach similar to those of the U.S and Singapore in dealing with challenges brought about by the new technology. He called the two countries’ approaches to cryptocurrency regulation “reasonable”.
However, he maintained that he was a bit skeptical when it comes to the leading cryptocurrency Bitcoin (BTC). His view of the top crypto is that it is a “harmful pyramid scheme”, adding that it only succeeds in wasting huge amounts of electricity.
The involvement of Russia’s largest state-owned bank, Sberbank, in the ICO trial is no surprise. The banking giant has operations in several European countries.
It became the first state-controlled financial institution in Russia to announce plans to launch a cryptocurrency exchange in Switzerland.
The announcement made earlier in the year noted that Russia did not have to allow the running of crypto exchanges while the Swiss did.
The bank indicated that its services would be available to institutional investors. And earlier this month, the bank’s CEO Herman Gref expressed the feeling that it would be wrong to ban cryptocurrencies for whatever reason.
According to him, cryptocurrency and its underlying technology have huge potential that is yet to be realized. The statement appears to reinforce the belief that the crypto landscape in Russia is likely to change.
Russia’s regulatory landscape
In early January, the Federation developed a Digital Assets Regulation Bill and presented it for consideration. The bill sought to establish a regulatory framework that would provide oversight on the crypto industry, including on ICOs, crypto mining and trading.
Russian authorities then officially launched the regulatory framework for the crypto and related industry activities in April. The framework targets the emerging digital technology and its use within the financial sector.
Part of the new push involved the need to develop regulations that would work in tandem with the changes within the sector. The Bank of Russia has the mandate, alongside state agencies and related institutions to evaluate all pilot programs within the new platform.
However, even with the new framework in place, authorities appear to remain a bit unconvinced about crypto and the ICO ecosystem. Earlier this month, Russian police seized 22 bitcoin ATMs for what they called “routine checks”.
Within the same period, Dmitry Peskov, a presidential representative on the issue of digital currencies appeared to back the notion that the country wasn’t going to change its approach as quickly as some within the sector would wish.
According to Peskov, his belief is that Russia will not have its own cryptocurrency. He attributes this assessment to a lack of necessity for a national cryptocurrency.
The move by the Central Bank may, therefore, be only related to the earlier efforts to see the viability of a regulated ICO industry and not the eventual release of a national cryptocurrency.