What authorities in different countries think about the boom of initial placements of tokens.
At different times governments around the world haunted the epidemic, terrorism, nuclear energy, world war. Now it is the turn of blockchain technology, namely the initial coin offerings (ICOs).
Every week some countries make a statement because everyone has something to say. However, the overall picture is unclear. Many nations express the radically diverge point of view on cryptocurrencies.
So, how does the government react to ICO ? Here are five main types of approach to ICO.
The forbidden city
The People's Bank of China announced a total ban on ICO and the work of cryptocurrency exchanges.
As noted by many observers, most likely, this intransigence (all token sales are illegal) is a temporary measure allowing the government to wait and, depending on how events will unfold, to properly assess the situation and determine a plan of action.
Some governments prefer to be progressive and open to innovation. They say: it is something completely new, so we need to develop specific laws.
However, in some cases, it's just the appearance. In other cases, we are talking about real attempts to formulate laws — the governments of the Isle of Man and Gibraltar are now developing a regulatory framework that focuses on new financial trends.
It is still unclear how functional the new legislation will be, but the process goes on, and that's already a progress.
The U.S., Australia, and Japan are prime examples of countries with democracy for which this warning approach is a quite understandable reaction.
When you are confronted with a complex phenomenon, don't be in a hurry. The safest and more rational way based on existing legislation, is to publish a statement in the form of warnings, and not categorical statements.
In short, the essence of these statements is to call for caution. ICO involve risks. Depending on the circumstances, the token may or may not be a security. If the token possesses the characteristics of securities, then each case should be considered separately. It is necessary to follow the current legislation on securities before doing something with ICO.
Some companies do what they want (and ask for forgiveness later). Others remain in the "bright side" (and ask permission for certain actions, or voluntarily apply to token rules that apply to securities — for example, the ICO carried out only for accredited investors).
Instead of hiding the head in the sand, some countries authorities are inviting fintechs to play in their sandbox.
In theory, the regulatory "sandbox" offers companies to cooperate with regulators, promising them big bonuses and discounts when they follow the new laws.
Sounds promising, although, some companies fear that it is a trap. Canadian regulatory "sandbox" — is one of the most active in the world and it has achieved certain results. It is a living laboratory that performs regulatory experiments with ICO, a crowdfunding platform for issuing tokens and crypto investment funds.2018 will be the year of ICO regulation with new and clearer legislative framework for its implementation.
Although Canadians with their "sandbox" can be applauded for the clarity of the recommendations, some investors see blatant flaws. When it comes to launching "law-abiding" ICO, it has to comply with a huge number of formalities.
Now let's take Switzerland. The blockchain situation here is not entirely clear. In summer, some commentators have referred to the fact that according to Swiss law, the tokens cannot be equated to securities. Therefore, the sale of tokens is not regulated.
In fact, they may not be regulated just because Swiss has not figured out how to regulate them, and now it is working on it.
Besides, on September 27, Switzerland’s Financial Market Supervisory Authority (FINMA) announced a study of techniques for ICO in the country, thereby giving a better understanding what they can get under the current regulations. It is also a kind of "warning."
The question of ICO regulation has confused the world. However, everything points to the fact that 2018 will be the year of ICO regulation with new and clearer legislative framework for its implementation. The countries whose authorities will find the best balance between the need for investor protection with the equally important need to promote ICO will be ahead.