The first initial coin offering (ICO) to be sanctioned by a traditional clearing and settlement platform is now underway in Russia.

Just days after signing an agreement with NP RTS Group, the LavkaLavka farming collective has discreetly begun taking orders for a pre-sale of its "biocoin" tokens. So far, the organization has raised $500,000 toward a $15 million goal. But if successful, the ICO would fund the creation of an expansive loyalty platform, one that would link together 200 farms, restaurants, cafes and small businesses that today have had difficulty getting capital from traditional banks.

Stepping back, the stamp of approval from a legacy institution represents yet another step toward legitimization for the ICO funding model, which has powered more than $2 billion in project funding worldwide, despite stoking fears about fraud and money laundering.

But what truly sets apart the ICO is how it fits into a plan initiated by Russian President Vladimir Putin to attract foreign investment to one of Russia's least developed regions.

In his first interview, LavkaLavka founder and farmer Boris Akimov explained why he went out of his way to work with Russia's existing system to implement what might be considered by some to be a disruptive platform.

He told CoinDesk:

When the ICO becomes broadly available on November 1, the tokens are expected to be issued on NP RTS's Voskhod platform, created last year in response to the establishment of Putin's Far East Development Fund to encourage investment in the region.

And it's this fund, which has set up policies including favorable taxes and the permission to experiment with ICOs as a way to attract investment, that is helping make the sale possible.

"The state gave this region special rights to do things which [are] not allowed for other regions," said Akimov. "This investment system, Voskhod, which is inside the RTS, also got special rights to start to work with blockchain and cryptocurrencies."

Echoing his sentiment was the director of innovation at Russia's central securities depository, Artem Duvanov, who has also been using blockchain to attract foreign investment in Russia.

"It's being done in a completely legal way," Duvanov told CoinDesk. "The buyers of LavkaLavka tokens will be granted with ordinary private equity shares in proportion to what they will have bought during the ICO."

Built from a fork of the peercoin blockchain, biocoin was seeded with 20 million tokens earlier this year as part of an "operational test mode" to gather data on how customers and merchants would use the currency.

Following that initial test phase, the first tranche of what will eventually be 1 billion tokens went up for sale on Monday, quickly generating the $500,000 in bitcoin, ether, the Russian cryptocurrency SIB and Visa and Mastercard payments.

Under the partnership with RTS, LavkaLavka immediately converts the funds to rubles and only handles fiat currency. Half the $15 million Akimov hopes to raise would be set aside for expanding the collective's network of farms and businesses dependent on locally produced goods.

But the other half has been earmarked for further development of biocoin. After the ICO completes, additional biocoin tokens will be issued to people who shop with members of the collective. Eventually, LavkaLavka wants to build out a system for tracking the supply chain of locally grown, indigenous food.

In order to cash-out their tokens, biocoin holders will need to undergo a short onboarding process at RTS to verify their identity. The Voskhod platform would in effect double as a stock exchange and a cryptocurrency exchange for the securitized tokens. Alternatively, users could spend biocoin on goods at affiliated locations.

"Blockchain gives the chance to the people to build their own community and to be on their own, to be more independent from modern financial institutions," said Akimov.

Notably, this is not the first time Akimov has benefited from the policies of President Putin.

In August 2014, Putin enacted food sanctions against the European Union, the U.S. and others that forced Russia to find new ways to feed itself. As a result, Akimov started to receive an increased number of calls from vendors around the country looking to capitalize on his nascent farming collective, according to a New York Times report.

Since then, LavkaLavka has doubled in size, from 100 farms to 200. In total, Akimov estimates the firm now employs 250 people, not counting the 2,000 farmers he estimates are employed by affiliate members.

In short, more ICOs of this sort may be expected. There are currently 14 other companies being vetted for admittance to the Voskhod platform, according to Vitaly Kaslivtsev, a project manager at NP RTS Group.

"The parties intend to conduct joint analyses and select potential projects, attracting potential investors for the purchase of tokens through the initial placement procedure using the exchange platform," he said.

In a statement following the signing of the agreement, the general director of Putin's Far Eastern Development Fund, Alexey Chekunkov, described the context of the partnership:

Boris Akimov image courtesy of LavkaLavka