Initial coin offerings have seen a significant decline in popularity, but they are not to be written off completely. Although you don’t hear the term “ICO” so often nowadays, some recent regulatory developments indicate they have a place in the digital economy realm. Crowdfunding through token sales has a chance of becoming a mainstream instrument for raising capital.
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Germany’s Financial Regulator Approves €250M Coin Offering
As if to prove coin offerings are not a dying genre, the German Federal Financial Supervisory Authority, Bafin, recently approved one of a decent size. Through its token sale, the Berlin-based blockchain startup Fundament Group is trying to raise €250 million ($278 million). According to the announcement, both accredited and retail investors will be able to take part in the fundraising campaign and individual investments will not be limited.
The project aims to enable participants to invest in the construction of commercial real estate through its Real Estate Tokens. At this early stage, it covers three sites in Hamburg, one in the financial capital Frankfurt, and another one in the university city of Jena, Forklog reported. Fundament Group’s ERC20 tokens will allow holders to receive annual dividends of 4-8% on their investments as well as payments upon completion of the construction works.
The German startup plans to conduct the token sale without an intermediary such as an investment bank, as the goal is to minimize the costs of the offering. Investors will be able to acquire the assets using either Bitcoin core, ethereum, U.S. dollars or euros. Those who pay with fiat currency will receive the tokens safely stored on a hardware wallet. And as the coin offering is regulated, passing KYC is a mandatory requirement for all investors.
Projects such as Fundament Group’s show that token sales may be returning, and not only in Europe but across the pond as well. In the first days of July, the U.S. Securities and Exchange Commission (SEC) approved Blockstack’s $28 million offering. The company, which is building a decentralized computing network and app ecosystem, has received permission to raise up to $50 million annually. SEC also gave the green light to the distribution of $187 million worth of Props tokens between content creators and users of the streaming platform Younow.
Russia Legalizes Crowdfunding With a New Law Applicable to Token Sales
The Russian Federation, which is in the top five destinations for ICOs, has adopted a legal framework to regulate the raising of capital through crowdfunding. This week, the State Duma, the lower house of Russia’s parliament, voted on third and final reading the long awaited Law “On Attracting Investments Using Investment Platforms,” commonly referred to as the “Crowdfunding Law.”
The bill, which is part of a whole package aimed at regulating the Russian digital economy, including the crypto sector, introduces some key new terms such as “utilitarian digital rights.” These include the right to demand the transfer of objects, the performance of work, or the provision of services as well as the transfer of exclusive rights to the results of intellectual activity.
The new legislation establishes rules and regulations that will govern crowdfunding platforms. For example, they will be required to have at least 5 million rubles (almost $80,000) of their own capital. The Central Bank of Russia (CBR) will keep a register of the entities that operate them and closely monitor their activities. The law also introduces safeguards for “unqualified investors.” They will be allowed to spend only up to 600,000 rubles ($9,500) annually on all crowdfunding platforms in Russia.
At this stage, cryptocurrencies are not explicitly mentioned in the crowdfunding law, although many of its texts are applicable to the crypto industry. The biggest shortcoming of the new legislation is its reliance on substatutory acts adopted by the CBR which remains opposed to the full legalization of decentralized currencies. Another problem is that in order to fulfill its full potential, the bill needs other laws that regulate the rest of the crypto space.
Russia has been postponing the adoption of its main crypto-related bill, the Law “On Digital Financial Assets,” for over a year now, despite several deadlines set by President Putin’s administration. The last one, July of this year, is not going to be met either. The draft, which was voted on first reading in the spring of 2018, is likely to be adopted in October, according to Anatoliy Aksakov, chair of the parliamentary Financial Market Committee. By that time a common position between various Russian institutions should be achieved with respect to the regulation of cryptocurrencies.
Aksakov also noted that all three bills in the regulatory package – which define digital rights,…