[ad_1]
With any new technology, particularly where large sums of money are involved, there will be careful scrutiny by regulators and scams. Ico have seen both. But the new nature of these digital token emissions has meant that the global regulatory landscape is fragmented, with each country looking at ICOs in different ways.
Are ICOs legal?
The short answer: it depends on where you are. It will be difficult to cross all the countries of the world, but let's look at the main markets.
China, which was once a prolific market for cryptocurrencies, has had a strong response in the sector. Last year, the People & # 39; s Bank of China declared ICOs illegal, warning people of the risks inherent in investing in them. Shortly thereafter, South Korea followed, prohibiting the collection of money through virtual currencies.
In the United States, there are no specific rules for ICOs, but depending on how the digital currency is classified, it could fall under the jurisdiction of the Securities and Exchange Commission (SEC). The regulator is in charge of supervising the trade of various financial products. If the SEC considers that a currency is a "security", then the company behind it may have to register with the regulator.
The SEC has however been very explicit in warning people about the dangers of investing in ICO.
"As with any other type of potential investment, if a promoter guarantees returns, if an opportunity seems too good to be true, or if you are forced to act quickly, please pay close attention and be aware of the risk that your investment may be lost, "says the SEC on her website.
Last year, the watchdog also issued a warning to celebrities who support ICOs by stating that they may have to disclose information about the relationship with society if digital money is considered a security.
Elsewhere in Europe, the European Securities and Markets Authority (ESMA) has published guidelines on ICOs last year. The regulator said that ICOs qualifying as financial instruments could fall under the relevant laws dealing with money laundering or the investment legislator
Some countries are trying to create new rules to bring ICOs into regulatory conditions. For example, the Government of Malta has recently approved three new draft laws on cryptocurrencies and blockchain technology. One of these new laws aims to introduce a regulatory regime for ICOs.
Similarly, in Abu Dhabi, the capital of the United Arab Emirates, the regulator published the guidelines on the launch of the ICO. According to the guidelines, companies wishing to perform an ICO must contact the Financial Services Authority to check whether they will be included in the body regulation. Companies will also have to publish a prospectus, just as a company would do for an initial public offering (IPO) on the stock market. Market intermediaries or secondary market operators dealing with ICO must be approved by the FSRA.
"If you put the goal of a regulator, regulators say" oh my God there is a concentration of encrypted capital that is in these ICOs, these people are not in the financial system, what is happening to the money " , "Lawrence Wintermeyer, a leading Capstone consulting firm, told CNBC. "There's a huge concern that retail people might be exposed to this."
Many countries are studying how to regulate ICOs, but there is clearly an inequality around the world. Lack of regulation, however, is a factor behind major scams – one of the biggest problems at the moment with ICO.
Scams and dangers
Investing in ICO is a risky asset for a variety of reasons. People often put money into products that do not yet exist. While this may not seem too dissimilar to say very early investments in other start-ups, people who bet on ICOs are usually not very sophisticated investors.
These projects also have high failure rates. Already hundreds of coins have died, which means that the projects behind them were scams, a joke or did not materialize. Dead Coins is a website that lists all cryptocurrencies that fall into those categories. So far, he has identified just over 800 digital tokens that he considers dead. These coins are useless and sell for less than 1 cent.
And because of the lack of regulation, scams are widespread in the industry. An example discovered by CNBC at the beginning of this year was a project called Giza which claimed to develop a super-secure device that would allow people to archive cryptocurrencies. In this case, the Scammers managed to raise more than $ 2 million in an ICO, and eventually escaped with funds without delivering any product. A bad actor or actor used a fake LinkedIn profile and copied images from another user's Instagram to create a fake character – and attracted more than 1,000 investors to the ICO project.
"Are there any fraudulent projects?" "Yes. Are there poorly conceived sales that have not thought about potential regulatory problems?" "Yes. Are there poor projects that will eventually fail?" Of course. "
Richard Muirhead, founding partner of Fabric Ventures
Investors are still trying to recover their money, but due to lack of regulation, there is very little consumer protection in space.
Another high-profile scam involved a company called Centra Tech Inc. It was an ICO supported by champion boxer Floyd Mayweather. The US Securities and Exchange Commission (SEC) charges the founders the execution of a fraudulent ICO.
Successful ICOs also have their problems. Bancor, whose coin offer we detailed above, suffered a security breach that saw $ 13.5 million of digital tokens steal.
However, many industry experts have predicted that ICOs are here to stay and that they will become professionals.
"Are there any fraudulent projects?" "Yes. Are there poorly conceived sales that have not thought about potential regulatory problems?" Yes. Are there poor projects that will eventually fail? "Of course, there are many, many deeply innovative projects among them. a handful of gamechangers ", told CNBC Richard Muirhead, founding partner of Fabric Ventures, an investment fund focused on blockchain projects.
"If 2017 was the year of the ICO initiative, 2018-2020 will be the years of the development of decentralized networks that will focus on the dispatch of the code of work and on the construction of communities".
