As the ICO, or initial coin offering, industry is now turning to the Kickstarter of the moment, governments are gazing at this new phenomenon with some concern. In an ICO, a startup sells tokens in exchange for cryptocurrencies. Basically, an ICO is a fundraising method in which companies attract investors looking score some more cryptocurrency by releasing their own coins. Now there is a movement pushing for a code of conduct for the disruptive fundraising method.
An ICO works as an initial public offering for a pre-determined product or solution. However, unlike a conventional Initial Public Offerings (IPO), an ICO uses digital currency as a mean of investment. This makes it immune to certain regulatory aspects that would greatly affect the ICO. However, this is rapidly changing as governments are now looking to regulate this sort of fundraising method. The Chinese government already approved a law that makes this type of investment illegal, and many other such as the Russian government, are now looking to implement regulation over coin offerings.
While critics of the model point out that investors are not afforded the same rights as in traditional capital market fundraisings, many voices within the community are now claiming for higher standards and more transparency in the growing ICO market. Alongside governments, a new movement wanting to implement a code of conduct for ICOs is on the rise. A proposal to bring transparency to the ICO market came out just days after China’s government declared ICOs illegal.
According to fnlondon, an online British News Agency, Crypto Valley Association (CVA) – a not-for-profit association supporting the development of blockchain technology – is producing a code of conduct for ICOs. With this, CVA is looking to underline the circumstances where regulation should be applied as a way to protect the end consumer.
Oliver Bussmann, the president of Crypto Valley Assoc...