European Parliament proposes new regulations for public ICO, and crowdfunding. The new proposal is made by Ashley Fox, Member of the European Parliament (MEP) representing the UK through the European Parliament’s Committee on Economic and Monetary Affairs (ECON), published on August 10. Though the proposal is still underway and not yet entirely contributed into, it is expected to address issues of fraud, which cryptocurrency community is a great victim of.
A New Legislative Regulation to ICO offering In EU Underway
A new legislative law for the regulations of ICO offering in EU is underway. ICO is known as initial coin offering, which involves offering investors a new cryptocurrency or token in exchange for funds, mostly the established cryptocurrency. A similar process is also included in the crowdfunding, where a share of a new startup is offered to the public, to raise fund for the projects and its development.
The method is an excellent way to start up a company with good intentions as funds are raised to lead the growth of the firm. However, it is unfortunate at the rate it has been abused, much more in the cryptocurrency arena. ICO offering has turned to an avenue to fraud unsuspecting investors. According to Satis Group Crypto statistics, about 81% of cryptocurrency ICO launches in 2017 were scams. In the year 2018, news of fake ICO where investors have been scammed floods the press daily.
To tackle the menace of cryptocurrency ICO fraud, the Europeans parliament took the step that’s similar to that of its Asian counterpart, handling the brouhaha that surrounds crypto ICO. The unregulated activities of ICOs have led to China and some other countries to ban ICO or crowdfunding.
The proposal for a regulation on ICOs was sponsored by Ashley Fox member of the European Parliament representing the UK, as noted by Ashley,
“This regulation gives the opportunity to ICOs that want to prove their legitimacy to comply with the requirements of this regulation. While this regulation may not provide the solution for regulating the ICO market, it takes a much-needed step towards imposing standards and protections in place for what is an excellent funding stream for tech start-ups.”
However, the drafted regulation by Ashley is a target at ICOs less than 8 million Euros as noted that “…crowdfunding service providers that wish to offer an ICO through their platform, should comply with specific additional requirements under this Regulation. However, private placements, ICOs raising more than 8,000,000 [euros] or ICOs that do not use a counterparty do not fall within the scope of those requirements.”
As more amendment is expected to the regulation, the passage of the regulation will revamp the cryptocurrency community as well as fight fraud.