EU officials propose ICO regulation draft, which outlines rules for European crowdfunding platform operators and companies. The new rules would oblige platforms to form a cap for crowdfunding and follow particular securities laws, as per the document.
14 August, AtoZ Markets – The European Parliament’s Committee on Economic and Monetary Affairs has suggested a draft proposal for creating the new regulations for public initial coin offerings (ICOs), as per the document that has been published earlier last week.
EU Officials Propose ICO Regulation Draft
A member of the European Parliament (MEP), Ashley Fox, has written a draft report concerning proposed regulation for European crowdfunding platform operators and companies. Reportedly, officials have been working on these regulations already from last year, while a formal proposal from the EU Commission has emerged in March with the mandate to develop guidelines on “crowd and peer-to-peer finance.”
As per Fox’s report, the regulatory framework offers an opportunity to regulate token sales across the EU bloc:
“This Regulation gives the opportunity to ICOs that want to prove their legitimacy to comply with the requirements of this regulation. Whilst this regulation may not provide the solution for regulating the ICO market, it takes a much-needed step towards imposing standards and protections in place for what is an excellent funding stream for tech start-ups.”
Following on this, the report also noted that crowdfunding service providers “should be permitted to raise capital through their platforms using certain cryptocurrencies.” Yet, while ICOs “offer new and innovative ways of funding,” they can also be utilized to “generate substantial market, fraud and cybersecurity risks to investors.”
EU Crowdfunding Limit
The regulations seem to only apply to public sales that raise less than 8 million EUR:
“…crowdfunding service providers that wish to offer an ICO through their platform, should comply with specific additional requirements under this Regulation. However, private placements, ICOs raising in excess of 8,000,000 [euros] or ICOs that do not use a counterparty do not fall within the scope of those requirements.”
The new rules would oblige platforms to form a cap for crowdfunding and follow particular securities laws, as per the document.
Mr. Fox has further highlighted the importance of providing some regulatory guidelines for the industry, adding that “at present initial coin offerings are operating in an unregulated space and consumers are at risk from fraudulent activity taking place in this market.”
He has also stated that he “believes that a number of changes should be introduced to improve the proposal,” adding that “this regulation is an opportunity to provide regulation for initial coin offerings.”
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