As Security Token Offerings (STO) are replacing Initial Coin Offerings (ICO) worldwide, Russia is riding the trend as well.
Recently, Newconomy published a series of articles about the emerging STOs and why they are the next big thing.
Today, Forbes published a piece about Russian developers and investors leaving the ICOs market and hopping up on the STOs train.
The STO move is another attempt to professionalize and regulate the crypto industry which has taken serious hits in 2018 Put simply, STOs are trying to connect the traditional stock market with the emerging crypto industry and venture capital.
“I think you will find that about a third of the STOs are going to either be Russian founders or Russian developers. I doubt you will find any of them being launched in Russia”, says John Slyusarev, managing partner of New York-based SMC Capital fund, which has already invested in one STO last year and are looking to further expand their STO portfolio.
Still, there are big barriers facing the attempts to improve the connection between Russia and the STOs market.
Slyusarev adds that “the Russian projects with Russian founders have the hardest time finding money as there have been some blowouts in Russian Ponzi projects and fraud schemes that have hurt Russia’s reputation”.
The brainpower is obviously there, as the majority of the world’s renowned developers are Russians e.g. Vitalik Buterin (Ethereum) and Pavel Durov (Telegram).
However, major strides are needed to overcome the regulatory gaps in order to have more Russian-based STOs.
“The STO is appealing, but there are regulatory hurdles to doing this in Russia. Without access to global markets, Russia won’t be able to develop a robust security token market anyway, and so STOs won’t be any better than existing ways of raising and distributing capital in Russia”, says Gregory Klumov, co-founder and CEO of STASIS, a tokenization platform based in Malta.
Until then, Russia-based developers will continue to raise funds in other locations, such as the United States, Singapore or Switzerland.