They’re on an ICO Hunt
With the increasing attention from government regulatory agencies such as the SEC and the FCA, there is a need to consider Vitalik Butlerin’s proposal titled Interactive Coin Offerings. The proposal sought for the market interaction of buyers in order to arrive at an equilibrium. In order to forestall such an embarrassing scenario where the SEC will be hunting down ICOs, there’s a need to put in place measures. By allowing government regulatory agencies to regulate ICOs, the main aim of ICOs will be defeated. With an estimated $4 Billion ICO fund before the end of 2017, the ICO community has to take a stand on regulating itself from within.
The attention ICOs have attracted is not limited to only the US and UK, in faraway Asia, the government is wielding it big stick on ICOs. The Chinese government has already stated that ICOs are illegal, while Korea has put a peg on local start-ups looking towards ICO for capital. The former Soviet Union is not left behind in the race to regulate ICOs with the application of securities law to ICOs. Japan has adopted a subtle approach to the regulation of ICOs unlike the outright banning by China. Even Switzerland where some of the biggest token sales have occurred is being cautious with ICOs.
The New Frontier
There is a need for self-regulation of the ICO market, more like taming of the ICO wild west. One of the ways to avoid being regulated by government agencies is never to be seen as securities, which is what these regulatory agencies are pushing for. With the rush of money into ICOs especially this year and the lack of tangible collateral other than an idea, there will always be interest from regulatory agencies. Cryptocurrencies are more than just a fad, and ICOs have to go beyond just showing their ideas on whitepaper to convince investors.
To regulate itself from within, ICOs have to avoid regulations from the government. More proposals like Vitalik’s two mutually exclusive properties have to be encouraged and developed. A level of certainty in value and participation like Vitalik suggested have to be implemented in future crowd sales. Investors will be able to determine the value of tokens based on the ideas presented in the Whitepaper. This will also ensure that everyone can decide to participate or opt out during the sales of tokens.
Conclusion: We can do better
Proactive steps need to be taken to regulate ICOs from within by the Cryptocurrency community and thought leaders. Else, ICO regulations will fall into the hands of the government regulatory agencies. Currently, many ICOs are off-limits for US residents and this should not be so. With the required laws, protocols, and regulations, ICOs can be embraced by investors from any part of the globe without fear.
Only a regulation from within can do the trick. Regulation from outside the cryptosphere will lead to unpredictable outcomes for ICOs, startups and the investors. I’m confident we can join together and show the naysayers, #WeCanRegulateOurselves
Also published on Medium.