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ICO Regulation Could Fall Under EU’s Crowdfunding Regulations

By Stefan Filipović
Published 2 months ago

Initial Coin Offering (ICO) was a lively theme in European Union (EU) since ICOs gain popularity as an effective way of raising funds. Some countries took quite a liberal stance towards ICOs and cryptocurrencies while others took quite a conservative stance. Amongst this mix of different opinions about the crypto community, EU decided to take a middle road. That is quite obvious when we look at how careful EU is in implementing cryptocurrencies into the everyday monetary system. However, a liberal aspect of EU's stance can be noticed if we look to a plethora of different blockchain and crypto research groups launched by EU economic departments. 

New Crowdfunding Regulation Draft

One of the main issues in EU's stance towards ICOs is an unclear legislative system regarding ICOs. This lack of clarity certainly negatively affects the success of ICOs and also limits EU from a lot new tech-savvy blockchain-based project. It seems as though this might come to an end soon.  

The European Parliament’s Committee on Economic and Monetary Affairs recently published a new draft that outlines brand new crowdfunding regulations. The interesting thing about these regulations is that they can be extended to include ICOs. One of the main proponents of this solution is a British Member of the European Parliament, Ashley Fox. He thinks that some ICOs could be brought under a new regulatory framework that deals with crowdfunding.  

The main thing that could be solved with these regulations is investor protection. Of course, it is quite obvious that these regulations would not represent an ultimate solution to ICO regulations, but they can be a much-needed step in the right direction. The report is pretty favorable towards ICOs as it states that ICOs present an excellent funding stream for tech start-ups.  New regulations will enable ICOs with the intent of proving their legitimacy to do so as they will be able to comply with the requirements of new crowdfunding regulations.

The relationship between new regulations and ICOs is quite clearly explained in the report as it states that the providers of crowdfunding services should be able to raise capital using cryptocurrencies. Amongst this notice, ICOs present a new and innovative way of raising funds, report states. Problem with ICOs are frauds and some cybersecurity issues. Because of that, the report proposes a solution where ICOs would have to comply with the new crowdfunding rules. In that manner, the crowdfunding service would be able to raise funds using cryptocurrencies and ICOs could gain much-needed legitimacy if they comply with crowdfunding rules.

Conclusion

This is certainly a step ahead towards more favorable ICO and crypto regulations in the EU. However, these new regulations do not include all types of ICOs. If ICO seeks to raise in excess of 8 million euros or it is considered a “private placement” it will not be able to prove its legitimacy through new crowdfunding regulations, concludes Ashley Fox. 

What do you think about upcoming crowdfunding regulations in the European Union? Will it help in the legitimization of ICOs? Share your opinion in our social media!