Regulations regarding Initial Coin Offerings (ICOs) have been one of the most controversial topics when it comes to crypto-related discussions. Many consider that only a certain type of ICOs need to be brought under regulation, many are in favour of all ICOs being regulated and some say that all of them need to be banned. British Member of European Parliament (MEP) Ashley Fox has now suggested that ICOs should be brought under a new crowdfunding law.
The European Parliament’s Committee on Economic and Monetary Affairs has been working towards drafting these new crowdfunding laws. The European Parliament views ICOs in a favourable light, stating that they are an excellent fundraising method, particularly for those startups which are dealing with technology.
By bringing ICOs under this new crowdfunding law, the European Parliament wants to ensure that ICOs that wish to prove that they are legitimate offerings can now easily become government regulated fundraisers.
Over the years, ICOs have been tainted as a scam where those who start the ICO make big claims on the innovations they wish to bring about – but often end up disappearing in an ‘exit scam’. However, with these new laws in place, regulated ICOs could mean that investors would invest in the ICO with a greater trust, knowing that their money is going to be safe.
Here’s a statement by Ashley Fox,
“In order to allow for a competitive Union framework, crowdfunding service providers should be permitted to raise capital through their platforms using certain cryptocurrencies […] ICOs offer new and innovative ways of funding but can also generate substantial market, fraud and cyber security risks to investors. Therefore, [ICOs] should comply with specific additional requirements under this Regulation.”
The above statement provides exceptions to the 3 types of ICOs which have been mentioned below. However, this is a draft and the final version might not have an exception to below mentioned names.
- ICOs which will be considered as ‘private placements’
- ICOs that use a counterparty
- ICOs that intend to raise more than 8 Million Euros
The European Parliament has been quite concerned with cryptocurrencies and blockchain technology in the past and has been exploring these emerging technologies with great interest. By bringing ICOs under the new fundraising laws, the European Parliament would make it clear for investors to identify which of the ICOs are credible investment opportunities.
A cryptocurrency enthusiast might not prefer regulation in cryptocurrencies, but prefers an ICO to be legit. That’s why even cryptocurrency enthusiasts think that regulation can stop fake ICOs from happening which could reduce a lot of ICO scams.
