Central Bank of The Bahamas (CBOB) Releases New Crypto Asset Regulation Paper to Stop Fraudulent ICOs
Initial Coin Offerings (ICOs) often suck. While it may not have looked like it in 2017, a lot of them were either scams or plain bad investments. Fortunately, some of them were good and we have companies like Augur today which are having a good share of success. In order for more companies to be successful, the Bahamas have decided to create a new crypto regulation.
As reported by Nassau Guardian, the regulators of the Bahamas have decided to take a stand against fraudulent ICOs. Following the move from many countries around the whole globe, they decided that establishing a clear set of rules is a far better idea than to simply ban ICOs from the country like the United States and China did in 2017.
The Central Bank of Bahamas (CBOB) has released a paper online that outlines a possible regulatory framework for this industry to follow and it is already preparing for the introduction of this whole new class of crypto financial assets in the country.
According to the central bank, the key challenges will be to raise the standards of the country for cryptos to the parameters of the International Monetary Fund (IMF) for payment-focused crypto assets and to stop tax evasion and illegal cross-border action.
Also, another problem that was found out by the bank is that the prices of crypto assets simply fluctuate too much due to their high volatility and that they are mostly unregulated yet, which opens a huge space for scams of several types appearing and posing as secure investments.
Protecting the Investors
The main preoccupation of the company, despite their efforts to stop money laundering, is to protect investors. ICOs will have to be largely regulated in the country in order to really protect the investors, so this is what the regulators are aiming at.
To offer regulated ICOs in the country, which will be the only ones that will be really allowed to exist legally, the companies will have to show the quality of their product and provide proof that they are not scammers. Because of this, it is believed that the industry standards will rise in the country after the regulation finally takes effect.
All businesses will have to follow the Payments Instrument (Oversight) Regulations of 2017 that addresses many of these concerns for the protection of the consumers. Providing liquidity, that they are not scams, soundness of operations and competitive practices will be required for the companies that will be listed in the country.
As ICOs will generate securities, the Securities Commission of the Bahamas (SCB) will be fully responsible for the regulation of these new financial institutions, including the ones promoting ICOs as fundraisers and the ones who will act as exchanges.
The regulators will use international requirements as a basis to construct a solid framework that will protect the investors and help companies to thrive in the market. This whole move is part of a larger effort from the government to modernize the financial sector of the country in order to use financial technology to become more efficient.
The goal, they affirm, is to become a really competitive country without being a prey to a lack of compromise with the integrity of the assets, as the government and the regulators believe that only regulation will stop the scammers.