On August 2, Russian President Vladimir Putin signed the law on attracting investment using investment platforms (“On crowdfunding”). Earlier it was approved in the third reading by the Deputies of the State Duma. The document is due to come into force on January 1, 2020.
The law imposes a number of restrictions, in particular, on the number of investments from unskilled investors – 600,000 rubles per year, as well as on the provision of services to attract investments only by persons included in the register of the Central Bank of Russia.
Especially for ForkLog magazine, lawyers reviewed the specifics of the federal law, pointing out its pros and cons.
No term “cryptocurrency” in the text of the law
Initially, the bill “On crowdfunding” was introduced to the State Duma as part of a package of three bills “On making appropriate changes to the Civil Code” and “On Digital Financial Assets (CFA).” According to Alexander Lukyanov, an expert in the BCL supplemental education program, it was assumed at that time that it was a systemic legal regulation of relations related to the acquisition of digital assets.
“In addition to the fact that the bills initially had a lot of uncoordinated, even at the level of terminology applied, it is now clear that the existing platforms do not fit within the framework of the new regulation, as they suggest attracting investments in the form of cryptocurrencies, not fiat funds,” he notes.
Thus, the expert continues, one of the goals of regulation – legalization of investment in tokens – is not actually achieved, as foreign participants and platforms clearly will not restructure all the infrastructure and technology used by them to the requirements Russian laws.
“Such a decision of the Russian legislator is sometimes seen as a compromise, but it should be taken into account that the introduction of unnecessary barriers can lead to the departure of investors to more loyal jurisdictions, which, along with the assessment of objectively existing risks, is also should be taken into account by the legislator when making decisions,” concludes Alexander Lukyanov.
Requirements for participants in investment platforms
The law includes investors and attracting investors, as well as individuals who are not investors and do not attract investments but acquire utilitarian digital rights or contact the operator investment platform to account for such rights.
As Efim Kazantsev, an expert in the BCL supplemental education program, explains, investors belong to the first group of participants in the investment platform. The investor in accordance with the law can be both a natural and a legal entity, to whom the operator of the investment platform provides services to assist in investing. For individuals, there are limits on the amount of investment – no more than 600,000 rubles per year. The exception to this rule will be individual entrepreneurs and qualified investors.
The second group includes those who attract investments. An ordinary citizen cannot be such a person – this status can be obtained only by legal entities created in accordance with Russian law, or individual entrepreneurs. The requirements for such persons are contained in article 14 of the act. It also contains restrictions on persons involved in extremist activities or terrorism, convicted, disqualified and bankrupt. In addition, those who attract investments must meet the requirements set by the rules of the investment platform.
To the third group of participants of the investment platform, who are not investors and do not attract investments, but acquire or place utilitarian digital rights on the investment platform, the law does not impose any special requirements. Such requirements are likely to be spelled out in the rules of the investment platform itself.
“In general, the legal requirements for participants in the investment platform are quite soft and reasonable. Investing and attracting investment is allowed to almost everyone who has not tarnished their reputation. Limiting the total amount of investment for individuals will protect the poorly versed in investment from ill-considered investment in risky projects.
The rules of the investment platform, which can specify and expand the range of requirements for participants of the investment platform established by law, will be of great importance,” says Efim Kazantsev.
Investor information and features of the ICO procedure
Under the federal crowdfunding law, if an investor acquires utilitarian digital rights, he may be entitled to demand the transfer of things, exclusive rights, services or work, the lawyer, the program’s teacher notes. Additional Education Blockchain Lawyers by Veronica Vovk.