What Governments Are Doing About Problematic ICOs
Governments have been reacting to the issues caused by ICO’s in a variety of ways. Many countries have released statements on the legality and regulation surrounding these. ICO’s have been problematic for many and the future of them remains uncertain even though they continue to evolve. The stances taken by governments ranges from a complete ban to the support of ICO’s.
One of the most extreme measures taken against ICO’s has been by China. They have completely banned any ICO’s and exchanges. This is not a huge shock as China has heavy regulations in place across the whole country. With something that is as unregulated as cryptos and in specific, ICO’s it is not surprising they steered clear.
Other countries have been more progressive on ICO’s. They realize they are a work in progress and treat them as such. These countries include Russia and Gibraltar who have created special legislation to monitor these ICO’s. This includes bringing them in line with other capital offerings of debt and equity regulations look like.
A popular approach taken by countries such as the US and Australia is the “warning” approach. This has come in the form of these countries announcing that investors should be wary and do their homework before investing. They are not cracking down on ICO’s but will uphold laws if they are issued as a security. Countries with this policy are somewhat fuzzy on the future of ICO’s as they have not released any helpful, clearcut guidelines.
Several countries are working with fin techs in a “regulatory sandbox” to understand ICO’s and properly create rules for them. By inviting companies to come work with regulators, the country can run experiments on live ICO’s. Companies can save money by working with the government on the more complex and costly aspects of regulations that come with issuance. Canada has been a big proponent of this method.
The one country that nobody knows about this point is Switzerland. At this point, it is believed that token sales are not regulated. This may be due to them working on regulation, but either way they are late to the party. They seem to be floating towards the “warnings” approach but still have yet to release any official statements.
ICO’s have been evolving since their start of 2017, hopefully with some regulations and a better understanding of ICO’s they can become the useful tool they are made to be.