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Russian State Duma has approved its first reading of the long-awaited legislation package regulating crypto-related matters and activities. The legal texts, voted almost unanimously, will open the way for legalization of cryptocurrencies in the Russian Federation, including their exchange and circulation under certain conditions. Deputies now have about two weeks to propose amendments before they proceed to final adoption of the three bills.
The Bills Regulate Crypto Assets, Crowdfunding and Digital Rights
The lower house of Russia’s parliament, the Duma, has accepted and approved on first reading three pieces of legislation tailored to regulate different aspects of the crypto ecosphere in the country. This week, the bills – “On Digital Financial Assets,” “On Attracting Investments Using Investment Platforms,” and “On Digital Rights” – hit the house floor. All of them were voted almost unanimously, the Russian Association of Cryptocurrencies and Blockchain announced on social media. Some interesting ideas, like tax breaks, have been pitched already during parliamentary discussions.
The first two drafts were introduced on March 20 by a group of deputies led by the chairman of the Financial Market Committee, Anatoly Aksakov, while the third one, which amends the country’s Civil Code, was filed on March 26 by the speaker of the Duma, Vyacheslav Volodin, and the head of the parliamentary Legislation Committee, Pavel Krasheninnikov.
The new legislation incorporates legal concepts like “digital right” and “smart contract” and defines cryptocurrencies and tokens as property, not as legal tender. It establish the sequence of actions in a token sale and the rules governing ICO projects. The texts form the basis for legalizing crypto mining but the legal definition of this economic activity will be expanded and refined between the two readings. Other amendments may be introduced in the next couple of weeks. Some proposals, including a moratorium on the taxation of miners, have been discussed in parliament already.
Cryptocurrency Is Electronic Property, Not Legal Tender
The bill “On Digital Financial Assets”, № 419059-7, prepared by the Finance Ministry, was voted by Russian legislators with only one “nay”. It regulates the relations arising from the creation, issuance, storage, and circulation of digital financial assets. The draft also establishes the exact procedures for conducting crypto transactions and concluding smart contracts, including the exercise of rights and the performance of obligations.
Last week, Russian prime minister Dmitry Medvedev said that common words like “cryptocurrencies” and “tokens” will be replaced with the legal terms “digital money” and “digital rights” in the new legislation. The text of this particular draft, however, contains definitions of the original, colloquial terms. It reads: “Digital financial asset – property in electronic form, created using cryptographic tools.” It also says that property rights in this case are certified by making digital records in a register of digital transactions.
“Digital financial assets include cryptocurrency, token,” the document states, emphasizing that these assets are not legal tender in the Russian Federation. According to the authors, tokens can have a single issuer, while cryptocurrencies can have multiple issuers, like the miners. Both can be exchanged with rubles and foreign currencies under rules determined by the Central Bank of Russia (CBR). They will not be considered a mandatory means of payment, account and transfer like the ruble, but individuals and businesses will be able to use them for payments within the frame of the law.
According to Russian media reports, the draft states that crypto purchases and sales should be performed only through providers of exchange services for digital financial assets – brokers, dealers, and corporate entities – acting as custodians. That includes cryptocurrency exchanges which will offer individual accounts and wallets to their customers. The rules governing these activities shall be developed by the Central Bank in consultation with the Council of Ministers.
Crowdfunding and Crowdinvesting Regulated
The bill also describes the sequence of actions involved in issuing digital tokens, stating that their release should be carried out through public offering. Entities behind initial coin offerings (ICOs) will be required to disclose detailed information about their projects. The organizers of token sales need to prove they control at least 5 million rubles (~$81,000) of capital. Banks and non-credit financial institutions won’t be allowed to conducts ICOs. The law also regulates crypto mining and implies that miners should register with the Federal Tax Service, as either individual entrepreneurs or legal entities, and pay taxes.
The Law “On Attracting Investments Using Investment Platforms”, № 419090-7, regulates specifically crowdfunding and crowdinvesting in Russia. The draft reads that both legal entities and individual entrepreneurs can be involved in such activities and prescribes the norms that the organizers of digital fundraising should abide by.
According to its provisions, private citizens can participate in crowdfunding without any registration but the investment platform operators should be registered with the CBR. The bank will also determine the maximum amount an “unqualified investor” can spend on a single project as well as and the limit of their yearly investments in digital tokens.
Only Tokens with Economic Value to Be Recognized as ‘Digital rights’
The third draft passed on first reading, the bill “On Digital Rights” – № 424632-7, amends the Russian civil law. It introduces basic provisions allowing legislators to regulate the market of tokens and cryptocurrencies and creating conditions for digital transactions. The text develops the legal concept of “digital right” to define tokens.
According to the authors, only tokens with significant economic meaning will be recognized as digital rights, unlike loyalty points or virtual coins used in online gaming, for example. A holder of a “digital right” is described as a person with unique access to the coin’s digital code.
Besides regulating the circulation of tokens and the execution of token transactions, the law is also expected to ensure judicial protection for their owners. The introduction of digital rights creates a legal basis for taxation of economic activities related to token sales, as well.
Do you think the new legislation will open the way for mass adoption of cryptocurrencies in Russia? Tell us in the comments section below.
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A US federal court has indicted three founders of a company purported to offer cryptocurrency-related financial products and have raised $25 million in an initial coin offering. In addition to claiming to have licenses in 38 states, the company also claimed partnerships with Bancorp, Visa, and Mastercard to issue its own cards.
Three Founders Indicted
The US Department of Justice (DOJ) announced on Monday that the founders of a cryptocurrency-related company have been indicted in the Manhattan federal court.
Florida residents Sohrab Sharma, 27, Raymond Trapani, 27, and Robert Farkas, 31, are co-founders of a startup called Centra Tech. The company purported to offer cryptocurrency-related financial products including the Centra Card, a debit card which supposedly “allowed users to spend various types of cryptocurrency to make purchases at any establishment that accepts Visa or Mastercard payment cards,” the DOJ described.
The three were arrested last month. The US Attorney’s Office of Southern District of New York and the Federal Bureau of Investigation (FBI) seized 91,000 ether which was “raised from victims as part of the charged scheme” in an initial coin offering (ICO).
The attorney for the United States, Robert Khuzami, explained:
As alleged, the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO. Whether traditional or cutting-edge, investment vehicles can’t legally be peddled with falsehoods and lies.
ICO Worth $60+ Million
The three began “soliciting investors to purchase unregistered securities, in the form of digital tokens issued by Centra Tech” through an ICO in approximately July. In oral and written materials, they falsely represented that Centra Tech had an experienced executive team and “had formed partnerships with Bancorp, Visa, and Mastercard to issue Centra Cards licensed by Visa or Mastercard.” They also represented that the company “had money transmitter and other licenses in 38 states, among other claims,” the DOJ revealed, adding:
Based in part on these claims, victims provided millions of dollars’ worth of digital funds in investments for the purchase of Centra Tech tokens.
“In or about October 2017, at the end of Centra Tech’s ICO, those digital funds raised from victims were worth more than $25 million” – the amount which has now appreciated to more than $60 million.
The Department of Justice found that statements made by the three to secure these investments “were false,” emphasizing that the three “were well aware of the falsity of such claims.”
For example, “the purported CEO ‘Michael Edwards’ and another supposed member of Centra Tech’s executive team are fictitious people who were fabricated to dupe investors.”
The DOJ then described the scheme used to fabricate the CEO and another executive:
Sharma text-messaged Trapani on or about July 29, 2017, that they ‘Need to find someone who looks like Michael’…Similarly, Sharma later wrote during that same exchange: ‘Gonna kill both CEO and her [another executive],’ ‘Gonna say they were married and got into an accident.’
Furthermore, the company’s claimed partnerships and licenses were non-existent, the DOJ revealed, citing text messages between Trapani and Sharma discussing “Centra Tech’s lack of actual partnerships with banks or credit card companies.” Another text message from Sharma to Trapani and Farkas says, “Gotta apply for all licenses,” “Should I even say this.”
According to the Justice Department’s announcement:
All three of them are charged in a four-count Indictment.
One count is “conspiracy to commit securities fraud, which carries a maximum potential sentence of five years in prison.” The other three carry “a maximum potential sentence of 20 years in prison.” They are securities fraud, conspiracy to commit wire fraud, and wire fraud. Additionally, each charge also carries potential financial penalties. “The maximum potential prison sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge,” the DOJ wrote.
Moreover, the US Securities and Exchange Commission (SEC) has separately filed civil charges against the trio.
What do you think of the DOJ indicting the three Centra Tech’s founders? Let us know in the comments section below.
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Reports suggest that Facebook may develop its own crypto. The plan is worth a mention, especially on the backdrop of the crypto ban imposed by the social media network. In Saturday’s Bitcoin in Brief, we also cover Telegram’s advance towards implementing its payment system using the Gram token. Some blockchain stories with beers and beamers complete today’s round-up.
Facebook Mulls Own Token, Reports Say
Facebook is reportedly considering creating its own cryptocurrency. Sources familiar with the matter told the financial news outlet Cheddar that the social media giant is serious about the project to introduce global crypto payments on its platform. A digital token would allow its two billion users around the world to take advantage of crypto transactions and skip state-issued fiat currencies.
Facebook announced recently that it had formed a team whose main task will be to explore the uses for blockchain technologies that the company can utilize to improve its business. The group is headed by David Marcus, former head of Facebook Messenger and ex-president of Paypal, who currently sits on the board of Coinbase.
The development of the payments system, however, is likely to take some time, possibly years. Marcus, who is a crypto enthusiast and an early investor, has been quoted as saying that crypto payments are still very slow and expensive. Facebook is not planning to hold an initial coin offering (ICO) to fund the project. In January, the social network banned crypto-related ads, including advertisements of token sales.
Telegram Moving Forward with Crypto Payments
Telegram, on the other hand, has already raised enough money to fund its own blockchain project and payment system. The messaging service, which is popular with the crypto community, has already attracted $1.7 billion dollars to finance its Telegram Open Network (TON). The company, founded by Russian entrepreneur Pavel Durov, has decided to call off a planned public ICO.
According to Russian media reports, Telegram is now conducting closed tests of a new service designed to store users’ information and documents for verification purposes. Telegram Passport will be used to keep personal details and copies of IDs, banking statements, and utility bills which will be used to identify users on Telegram’s blockchain TON.
The identity verification feature is needed to facilitate payments using Telegram’s own crypto token called Gram. Once uploaded, the personal information can be potentially shared with partners within the platform, but also on their systems. Telegram Passport, which should be launched by the summer, is expected to prevent anonymous crypto payments.
Crypto Beer Vending Machine to Check Age
Civic, a San-Francisco-based startup, has recently announced plans to introduce a “crypto beer vending machine.” The project, which will be realized in partnership with a leading US beer producer, aims to also prove that blockchain can be used to verify if a thirsty guy or girl have 21 years of age to legally consume the alcoholic beverage. To get a cold can, one has to install Civic’s app on their smartphone, verify their ID, and then walk up to the machine, Futurism reports. The project’s success depends on the readiness of government authorities to accept identity verification performed on a blockchain. Civic’s beer vending machine is still a prototype.
BMW Tracking Mileage on a Blockchain
Another blockchain partnership aims to track the mileage of cars. A team at BMW, the German automobile manufacturer, has been tasked with finding a way to better preserve the resale value of vehicles leased by the company. Collecting reliable data for the mileage, amortization and maintenance of these cars is crucial for achieving the best price on the second-hand market.
The blockchain startup DOVU has been invited by BMW to establish a partnership with Alphabet, the auto giant’s leasing and fleet vehicle branch, and BMW’s Innovation Lab in order to develop a system to collect and keep record of the important information. The companies behind the project hope to also evaluate how effective tokenization can be in encouraging customers’ cooperation.
In a pilot program implemented by the partners, BMW drivers are prompted by a custom wallet app to take a picture of their dashboards once a week. All submissions are added to DOVU’s blockchain which is used by Alphabet to compile consistent and unalterable data reflecting the exploitation of the vehicles. The information is then used to assess the mileage and the depreciation of the used cars and ultimately determine their resale value.
What do you think of today’s Bitcoin in Brief stories? Let us know in the comments section below.
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Over the past few years since the launch of the Ethereum network and other blockchains that can create tokens, initial coin offerings (ICOs) have been all the rage as all of these token projects have raised billions of dollars in ether, bitcoin, and other cryptocurrencies. A great majority of the ICOs today are ‘ERC-20 tokens’ created by the Ethereum Virtual Machine (EVM) with no more than a few hundred lines of code. Unfortunately, there’s a big misconception that a bunch of nerdy geniuses created these blockchain-based tokens, and today we’re going to show you just how easy it is to create an ERC-20 token — In less than thirty minutes.
Posternut (PNT): The ERC-20 Token Created in Less Than 30 Minutes
Today we decided to create a contract using the programming language Solidity, in order to create a custom token using the Ethereum network. We want to demonstrate just how easy it is for anyone with very little coding knowledge to launch a coin. There are lots of ICOs out there in the crypto-space and a great majority of them are ERC-20s derived from the public Ethereum blockchain. Essentially an ERC-20 token is a contract written in Solidity that sets the parameters of the coins attributes, like where the tokens are stored, the token’s name, ticker symbol, supply, and more.
The Necessary Requirements
Finding out how to create a token only takes a minute with a quick Google search on the subject. We followed a short walkthrough written by Moritz Neto, and watched a quick video filmed by the Youtuber Ivan on Tech. Both instructions detailed the creation of an ERC-20 token that can be done in less than 20 minutes, and we created a token called ‘Posternut (PTN) in 25 minutes. In light of our first time creating a Solidity contract, we used ETH testnet tokens on the Ropsten Network so no real funds were lost.
Next, we decided to download the Metamask Chrome extension Ether wallet, a fairly smooth platform but still in beta. Other wallets can be used to create a token contract as well, like Mist and the My Ethereum Wallet (MEW) platform. You are also going to need some testnet ETH for the ‘gas’ (network fee) to create the contract on the Ropsten Network, and there are a bunch of Ropsten faucets that dispense testnet ETH. We stocked up on some coins and then found a contract which we got in Moritz Neto’s guide, but there are all types of solidity contracts that can be re-written. Basically, we left this page open in the browser to copy and paste the Solidity contract, and all that is needed next is some slight modifications.
Then we went to a website called remix.ethereum.org which is used to launch the contract. This process can also be processed on the aforementioned wallets above as well, but we used the Remix Solidity IDE platform. After copying a token contract you need to paste the code into the Remix platform and edit a few parameters. This is when you want to choose the tokens name, the token’s symbol, the max supply, and the Ethereum address to deposit the tokens. After all of that is chosen and changed within the copy and pasted code, the next option is to ‘run’ the codebase you edited. If there are any warnings that are ‘critical’ the Remix platform will tell you something is wrong. In the ‘run’ section choose ‘Injected Web (Ropsten)’ and the name of your contract.
From here the Metamask address is also tethered to our account and we simply pressed deploy. If something is wrong with the contract then it will display warnings in yellow or red and you may need to fix these issues before deploying the code to the Ropsten Network. After pressing ‘deploy,’ the transaction will be sent across the network. As soon as the transaction confirms the contract should be complete as long as there were no errors.
Things Needed to Deploy a Token Contract on the ETH Network in Thirty Minutes:
- An Ethereum wallet. (Mist, MEW, Metamask)
- Testnet Ethereum or real ETH can be used for gas.
- A Solidity token contract.
- A platform to deploy the contract either on testnet (Ropsten, Rinkby) or mainnet. (Remix, MEW, Mist)
The Simplicity of Launching an ICO
The name of our token is called ‘Posternut (PNT)’ and there are 100Mn tokens now in existence on the Ropsten network. Creating the token took only 25 minutes and the same thing can be done on the main Ethereum network with less than $20 USD worth of real mainnet ETH for gas. Most of the time-consuming parts of the process is basically studying the directions on how to create an ERC-20 token, and following each step. After creating the Posternut tokens we decided to send the 100Mn PTN to another address which was sent with no issues.
As we stated above, it doesn’t take a genius to build an ERC-20 contract and now that you have seen the different Solidity contracts that make this process work, you can also see if an ICO project used this same method. Simply look at the contract code to see if it resembles something copied from another project, as you’d be surprised to find quite a bit of them. After creating the Posternut tokens there are only a few other things needed to launch an ICO. Observers will find that all a team needs to push a project, is a website, and a white paper. We all know that these ICOs raise a lot of money as token sales have raised over $5.6Bn in 2017 alone, and continue to raise funds this year. If all it takes is a website, 25 minutes of coding, and a white paper this may be why over 46 percent of ICOs fail.
Before Investing in Token Sales, Do Yourself a Favor and Research These Projects
So before investing in an ICO do some research on the project and make sure it is not some ‘fly by night’ guy who coded a coin in less than thirty minutes. The fact is just because a person(s) can build an ERC-20 token doesn’t mean the project is worthy, and investors should diligently research ICO teams and the tokens they are selling. Otherwise, you could be purchasing a quickly made coin, and buying into a word salad white paper written to make you believe Posternut (PTN) tokens are the future of decentralization.
What do you think about launching an ERC-20 in less than thirty minutes? Let us know in the comments below.
Disclaimer: Walkthrough editorials are intended for informational purposes only. This is a guide using testnet coins as real funds could be lost experimenting with this method. There are multiple security risks and methods that are ultimately made by the decisions of the user. There are various steps mentioned in reviews and guides and some of them are optional. Neither Bitcoin.com nor the author is responsible for any loss of funds, mistakes, skipped steps or security measures not taken, as the ultimate decision-making process to do any of these things is solely the reader’s responsibility. For good measure always cross-reference guides with other walkthroughs found online.
Images via Shutterstock, Twitter, and Jamie Redman.
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