April 16, 2018: There is debate over the countries that are friendly toward ICOs. The list of the friendliest ones includes Estonia, Switzerland, Luxembourg, Singapore, Gibraltar, the Cayman Islands, Lithuania, and Malta. Then there are regions such as the EU, the US, and Russia that are strict but open to the idea of ICOs. Then again, there is Japan, which has legalized the use of crypto money. Last, there’s China and South Korea that have banned this digital crowdfunding phenomenon altogether.
All of these developments are making the ICO landscape evolve in unimaginable ways.
Just like a region’s regulatory friendliness, its jurisdictional history in dealing with crypto assets is yet another important factor that changes the way these ICOs raise money. More commodity regulators are desperate to find fraud in ICOs. These agencies worldwide analyze the representations and promises that an ICO makes to its investors and consumers. With that analysis, these agencies are nipping all those scammed ICOs right in the bud.
Many ICO investors find the involvement of regulatory bodies in ICOs reassuring, as many projects make unrealistic claims or sell security tokens as consumer assets. But what are these regulations, anyway? Let us explore.
The local regulations that are restructuring the ICO ecosystem
Introducing ICO–specific regulations is the first step to restructuring the world of tokens to become safer. However, these regulations are made locally—and the crypto-verse is still waiting for a completely decentralized set of guidelines to govern ICO investments. Yet some regulations are better than no regulations at all.
Below there’s an overview of some country-specific regulations that are changing the game of tokenized fundraising once and for all.
In the US, the token-selling projects can be launched—but they are well-regulated. In December 2017, the US Security and Exchange Commission (SEC) issued a statement expressing its concerns about protecting ICO investors. There are no substantial federal laws as of now in this regard; the US government, however, does expect the ICOs—especially those selling security tokens—to be registered with the SEC.
Additionally, the SEC views ICO endorsements done by celebrities as unlawful if the nature, source, and the earned amount remain undisclosed. Last, the US Department of Justice is following ICOs actively so that it can penalize all those projects that are not complying with some basic rules.
The ICOs within the European Union are allowed, but the project organizers must comply with every existing AML/KYC regulation. The European Securities and Market Authority, or ESMA, views ICOs as high-risk events. And by the looks of things, the world of crypto assets can expect to see stricter regulations in the coming time.
The ESMA is putting the responsibility with ICO organizers for ensuring that a robust regulatory framework is followed and all the required permissions are requested in advance. Nevertheless, according to Mario Draghi, the president of the European Central Bank, the financial institution is not having the power to regulate or prohibit Bitcoin.
At press time, raising funds through ICOs is not banned and is even unregulated. However, recently, Russia had issued five orders for making it really difficult to raise funds through this all-new fundraising mechanism. In January 2018, Russia’s Ministry of Finance had introduced a complete draft of the federal law for strictly regulating these ICOs.
The draft has really detailed, and that is why it has even set a hard cap of RUB 50,000 for all the private, unqualified investors; that is approximately USD 900. However, all the licensed investors will have no limit. Additionally, ICO organizers have to reveal various details to the government, including operational and legal details.
What do these regulations mean for the airdrop community?
The ICO ecosystem is reshaping itself so that it accommodates well with all these new regulations. But will all this affect the global airdrop community? The long and short of it is yes there will be effects, but they will be positive. Let us have a rundown on the possible changes that these new regulations will bring to the crypto-airdrop landscape.
The world of crypto airdrops could possibly have scams. Some ICO projects generate hype about their offerings by giving free tokens; while the reality is that these businesses do not have anything substantial and valuable to offer. So, with the presence of these regulations, it will be beneficial for all those companies that are delivering something worthwhile; that is, these honest blockchain-backed projects can quickly unleash their full potential by using airdrops as a growth channel.
Since the regulations will have effects across the board, different people involved in a crypto-airdrop initiative will be benefited. For instance, if there are proper regulations in place, then it will improve a crypto project’s transparency. Overall, these regulations will benefit not only those who are getting the airdrops but also genuine blockchain-based companies planning to airdrop some tokens.
In short, these regulations are building a super-robust legal framework that will definitely streamline the way ICOs raise money and airdrops happen.
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