A Brief on Rules & Regulations For ICO Tokens In USA, UAE and Russia

Initial Coin Offering (ICO) development is known as a new tool to raise funds by entrepreneurs and a new investment plan for investors. But it is also labeled as a scam to lure investors. Due to this label investors were not even ready to hear the name of an ICO token. As we know, many ICO developments took place, thousands of cryptocurrencies and ICO tokens were developed and are still being developed to fund an enterprise blockchain development. But again, even whitelist investors seemed to vary for ICO token investments.

That is when many countries’ government and ruling authorities intervene to regulate ICO development and ICO tokens. As we know, blockchain technology has unlimited potential to increase the effectiveness of how a business or a company operates. The ICO development offered by this technology holds the same potential and to save it from scammers many countries have and are implementing ICO token rules and regulations.

These regulations resulted in dividing ICO tokens into two categories, utility token used to purchase a product, service or gain access to the blockchain based web application, and the second is security tokens used to raise funds by entrepreneurs and as an investment by large-cap investment.  Following are some of the major countries which have implemented the laws on ICO token development. Please note that mentioned laws tend to change based on a particular country’s economic and blockchain market conditions.

ICO Token Rules In The USA

The united states of America were one of the first countries to establish a concrete set of laws to regulate ICO development and trading of ICO tokens. It is also a hub of blockchain development. The USA has not much to offer for Utility tokens are same as cryptocurrency but for security tokens following laws have been applied:

• ICO tokens with high investment amount are regarded as Securities and developers or providers of these ICO tokens needs adhere to SEC (Securities Exchange Commission) registration or need to seek exemption under Securities Act of 1933, Regulation D, Rule 504, Rule 506(D), and Rule 506(C) subject to selling tokens to types of investors mentioned by SEC.

The investment must be with investors for at least a year depending on their net worth.

• An ICO token with an underlying asset such as equity or a physical asset which gives you the ownership to that asset must adhere to regulations Crowdfunding (Reg CF). In which, investment must be with investors for at least a year depending on their net worth.
• Apart from these, an ICO development company and investors need to consider the Howey Test which assesses your ICO token regarding which category the token will fall into, a utility token or a security token.

ICO Token Rules In The UAE

Until last year, the United Arab Emirates had no regulations for blockchain technology and related developments such as ICO token development. Securities and Commodities Authority (SCA) proposed a plan indicating significant changes in UAE blockchain market including ICO development and token offerings. But to rest assure, the SCA is promoting blockchain development and ICO tokens to whitelist investors by the future implementation of following regulations:

• ICO development and ICO token trading are allowed under a proposed mechanism to regulate the digital securities and commodities.
• There will be regulations on listing and trading of such securities, and smart contracts will be used for this purpose. Moreover, e-wallets for trading purpose need to register on blockchain platform by SCA.
• The KYC and other information to prevent anti-money laundering activities will be available in this blockchain as well.

ICO Token Rules In Russia

Russia is using a completely transparent approach to regulate ICO development and trading of ICO tokens. Through newly introduced policy, Russia aims to make their native currency ruble strong in the international currency exchange market. Those regulations are as follows:

• The payment through Digital financial assets such as cryptocurrency is illegal in Russia.
• The Russian government has “Exchange Operators” who identifies users, keep track of their digital wallets and transactions of cryptocurrency exchange. The list of cryptocurrencies approved by the central bank will be released soon.
• The ICO development company need to acquire a license to develop, produce and distribute cryptocurrencies and ICO tokens and that license will have validity for five years.

ICOs registration is required by the Russian Federation as well, and minimum capital requirements are 100 million Rubles at least.

• These companies and entities will be controlled and monitored by MinComScyaz (Ministry of Telecom and Mass Communications, Russia)
• ICOs registration is required by the Russian Federation as well, and minimum capital requirements are 100 million Rubles at least.
• A Russian Bank account is mandatory.
• ICO development agency will require to support buy-backs from investors at a nominal price using funds raised by the token sale.

The part two of the rules and regulations for ICO tokens will be followed in future posts which will cover other significant countries such as China, Canada, the UK, and others. These countries accommodate many ICO development companies, ICO token investors and hold great potential for blockchain technology in various sector of an economy.

We hope you have found this article informative and interesting. For more information or queries visit @icodevelopment.io and know more about this technology. You can also contact us or send us an email at sales@icodevelopment.io