The European Parliament’s Committee on Economic and Monetary affairs have released a draft report suggesting the creation of new regulations for public initial coin offerings (ICO).
The draft report, written by UK Member of the European Parliament (MEP), Ashley Fox, outlines proposals for fundraising platforms and companies. The report suggests that crowdfunding is increasingly an established form of alternative finance which a service provider can utilise through a digital platform used to interact with clients. The regulation of ICOs has been ongoing since the inception of the concept; with a formal proposal for the development of a framework on crowd and peer-to-peer finance released in March. This framework provides an opportunity to regulate token sales.
Due to some of the inherent risks associated with ICOs such as fraud and hacks, the proposal imposes a threshold for a maximum consideration for each crowdfunding offer of 8million Euros. This should be in accordance with practices on national markets for cross-border business funding. The threshold is for the protection of investors and will only apply to those ICOs raising less.
For a healthy competitive framework, the report states that: “Crowdfunding service providers should be permitted to raise capital through their platform using certain cryptocurrencies, yet this can generate substantial market, fraud and cyber security risk to investors”.
Many individuals are looking to exploit the ICO market and entice investors to buy bitcoin for their fraudulent project. The report goes to explain that, “crowdfunding service providers looking to offer an ICO through their platform should comply with specific additional requirements under this regulation”. Under this draft, it is the crowdfunding platform that must conform with regulations to bring authenticity and security for investors. We could see an increase in crypto buying if new regulations are introduced that positively affect the market sentiment.
To keep informed with the latest regulations or maybe you need to buy Bitcoin or Ethereum for an ICO, be sure to head to BC Bitcoin.