Zhanna Tomashevskaya is a lawyer with a practice that is rare for Russia: she is equally easily oriented both in Russian legislation and in Western. At the upcoming Blockchain & Bitcoin Conference Moscow,
she will talk about the relation of the law to the ICO in our country and in the USA.
We talked with her about whether the Russian ICO has a “special way” and why the excitement around cryptocurrency looks like a gold rush today. Interviewer: Elena Andreeva (E.A.)
Respondent: Zhanna Tomashevskaya (Z.T.)
E.A .: Zhanna, tell us, what made you study the American crowdsale legislation?
Our practice has grown with customers: as soon as technology projects began to look at the crowdsale, we did the same. Before that, I had been involved in venture projects for many years, and some of them entered the US market. Stock operations are quite difficult in the States, so we need to study this area in order to work with international clients.
It is very interesting for us to study the legislation on crowdsales, it helps in the implementation of blockchain based projects. It is interesting to look at the development of legislation not only in the aspect of American regulation ( SEC
), but also in the regulation of this new, not yet fully studied institution in other countries (Switzerland, Singapore, Japan). We hope that Russian legislation will soon be able to offer comfortable conditions for the ICO
.. .: Do you often come across ICO in your legal practice?
We have ICO-projects, we are engaged in analytics and help projects to understand American regulation. Now there are a lot of requests, but after discussing tax and regulatory issues, not all go further, which is good: only those projects that are confident in themselves and their product go to the consumer. I believe that this is the site of the future, and for successful work it is necessary for the “wild west” to end as quickly as possible, and the blockchain to become a platform for financing good projects
. We do our part by talking about regulation and that law in such matters is not the enemy, but a friend.. .: Experts today say that up to 90% of ICO projects are scam. Do you agree with this assessment?
Difficult question. All the projects we are working on are real. But in a crypto community, it can’t do without cheating, and this undermines the authority of the entire community. The situation is reminiscent of the gold rush or the times of sales of railway bonds. It is easy for a professional to recognize a dishonest project: white paper is usually poorly worked out for them, because they do not plan to do anything except fundraising.E.A .: Do you think the numbers differ for the USA and Russia
ZH.T .: I suppose that in the USA there are much more such projects, simply because there is a lot more market there. But both in Russia and in America there are enough enterprising guys who would like to capitalize on ICO without creating a product.E.A .: Tell us about the regulation of cryptocurrency in the United States. What structures are involved in the process? What are the main regulatory documents?
This is a rather extensive topic. She was talked about in the summer of 2017, when the SEC conducted an investigation into the DAO
(decentralized autonomous organization), and the main conclusion was the confirmation that the release of tokens could be equal to the issue of securities under US law. Since that time, I often hear that the SEC has equated the issue of tokens to the issue of securities and now every ICO needs to be registered in it, which is not entirely consistent with the facts.
The regulation is based on the Securities Act of 1933
and the Stock Exchange Act of 1934
. And the main precedent is the case of the Securities and Exchange Commission v. Howie, considered in 1946. If this law is followed, then a token can be equated to a security only under certain circumstances. This is an investment of money, the organization of a joint venture, the expectation of profit and profit growth solely due to the efforts of third parties.
As you can see, the legal framework is old enough. SEC only confirmed that the existing base is applied regardless of technology. But the question of a separate regulation of cryptocurrency in the United States is now being actively discussed.. .: The US Securities and Exchange Commission has already initiated several cases concerning blockchain projects. She recently filed a lawsuit against the mining pyramids GAW Miners and ZenMiner. A few months ago - against fake investment projects Diamond Reserve Club World (DRC World) and the REcoin Group Foundation. Do you know about such precedents in Russia?
At the moment, no high-profile processes related to ICO in Russia have been initiated. There is an isolated case: in September 2017, there was a Bitcoin cashing case, which was classified as fraud.E.A .: In your opinion, are investors in the US protected from losing money? How effective is new US law against scam projects?
Strictly speaking, the last SEC investigation into the DAO does not introduce a new legal regulation. The SEC has shown that its law enforcement practice will be based on the already well-established approaches to the regulation of securities.
The SEC's tough stance on the issue of ICO and blockchain projects on the Internet can provide preventive protection, since the founders of projects can now seriously fear criminal prosecution. Funders today are trying to set barriers for American investors specifically in order not to fall into the legal field of the United States. For example, if we go to the eos.io ICO project website, then in order to purchase a token, we will need to tick the “I am not a US citizen” checkbox.
These measures are important, but, as with the offline pyramids, the “educational” activity among investors is no less important. I think that in the near future we will face a large number of defaults, after which the self-regulation mechanism will be activated in the community. It will complement the legislative measures.E.A .: Why do you think there is no legislative regulation of ICO in Russia? Are steps being taken in this direction?
While the problem is in the absence of an established position of the state on the issue of cryptocurrency. On the one hand, the Central Bank offered to block sites that sell bitcoins; on the other hand, the Ministry of Finance proposes to register cryptocurrency exchanges. The reaction to the cryptocurrencies of top state officials is changing all the time. With the advent of special regulation, the situation will change, but for now it is difficult to say which way.
Now bills are being drafted, round tables are being held, issues are being actively discussed in the community
. So far, no one knows which way the legislation will go.E.A .: What is the fate of investors affected by unscrupulous crowdsails in Russia? What steps would you advise them to take as a lawyer?
The main problem in Russia so far is that state bodies do not understand how to deal with unscrupulous crowdsales in practice. In our country, there is criminal liability for fraud and illegal business, money laundering, etc. The practice of applying personal data legislation or combating extremism shows that executive bodies are vaguely aware of how to work on the Internet, but There is progress, and positive changes can be expected.
If the organizers of the sale of tokens turned out to be fraudsters, you should in any case contact the law enforcement authorities. But a refund seems unlikely.
The best advice that I can give as a lawyer: carefully study the projects before investing, so as not to get into a similar situation.