The European Unoin’s Parliament through its Committee on Economic and Monetary Affairs has called for strict regulations pertaining to public initial coin offerings (ICOs).
In line with proceedings, members of the committee in a report presented by its Chair and United Kingdom EU representative Ashley Fox- tabled opinions and suggestions on legalization and regulation of token issuance platforms especially those within the European Union Threshold.
According to the EU reports, these presently proposed ICO regulations have come at a pivotal time and are a sum of last year’s efforts by the institution to ensure adherence to guidelines with respect to activities of crowd-funded and peer-to-peer financial systems; as a counter measure against the recent notoriety of ICOs with exit scams, offering of unreliable market products and shit coins to the public.
The proposal for regulations is said to include details which clearly define ICOs under proper legal boundaries, specifies the framework for token sales and monetization, outlines government approved legitimacy tests for deserving platforms and entrepreneurs all hinged on acceptable practices within the region.
Mrs Fox further stated that;
“While this regulation may not entirely 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.”
This assertion by Fox comes at a time when it has become pertinent to ensure that ICO fund raising activities pursue pure goals devoid of fraudulent intent as recent statistics suggest about 81% of launched ICOs in 2017 had turned out to be frauds.
While accessing this proposal, deliberations towards allowing crypto projects raise funds using specified coins were made with a section of the proposal also making provisions for projects to introduce their approved digital tokens to the public as it represents an “innovative way of funding”; this section however hit a rock as some parliament members pointed out certain implications of this process with reference to how ICOs can be used as a financial tool for money laundering, fraud and posing cyber-security risk for investors.
While commenting further, The EU committee stated that the proposed regulations only apply to projects raising less than 8 million Euros, with a clause for stricter rules or total disregard for projects above this range under the new proposal.
The EU will as deemed fit look at further considerations and additional changes to this document as a long term panacea to ICO backdrops in a bid to curtail excesses without affecting capital and innovative capacity of ICOs. This soft stand by the EU is in direct contrast to an outright ban embarked on by Asian giants China and South Korea earlier in the year with regards to ICOs.
In her closing report, Fox reiterated general member opinions that the ICO market at this time operates in a highly unregulated space and pitches consumers at dire risk of fraudulent losses; hence the need to offer these regulations as an advanced layer of protection for the budding European cryptocurrency community.