Equity Token Offering: Better Benefits Than Initial Coin Offering Model?
In Europe, there are exciting developments that are taking place, just like the regulators and also the various blockchain companies in the market playing cat and mouse. Last week the cryptocurrency community watched in awe as Malta became the very first country that has been able to pass on the new regulations to be used around the blockchain technology.
At last, there is a clear set of guidelines that have been put in place on how, as an investor, you will be able to hold a legal ICO.
More On Malta
The government in Malta fully recognizes that there is a need to have new laws in place this is for the latest technology in the market and also the various situations that have no precedent. So instead of the country squashing the current innovation taking place and labeling everything to be a security concern or even utility, they will instead use a qualifying scale system.
So this means on one end it will be a security, while on the other hand, it is a Utility, but it has not been limited to this as a hybrid can be developed, this is a virtual asset that can easily be traded on the exchange in the country.
But this is not the only country as Germany has also started making headway when it comes to the legal aspect of ICO’s. Currently, they have been able to extend the fundraising method to the off-chain companies successfully. So this means that any company that is either public or private, in the blockchain technology or otherwise is now able to hold a legal ICO.
How, you might ask? Well, this will be made possible by merely tokenizing the assets, holding an Equity-Token-Offering (ETO), and even issuing shares.
What Exactly Is An ETO?
The German law has incorporated two definitions of securities, which has been able to enable the various companies to issue shares in the form of equity tokens. These tokens that have been developed will allow multiple investors to receive a certain percentage of the voting rights which will then allow them to become part owners of the said company.
When a company is able to issue these equity tokens, it makes it all very interesting as it will allow all the currently registered companies to tokenize their assets and be in a position to raise the needed funds.
The use of ETO’s unlike the ICO has been made completely legal in Germany, it is because all the companies are registered. Which means these companies comply with the set practices like the AML and KYC. As the blockchain technology is slowly moving more into the mainstream, it is creating enormous possibilities for the ETO.
As this will allow different types of businesses to raise the needed funds from their everyday investors, all this done possibly in a crowdfunding mechanism.
The Final Take
There are so many exciting developments taking place in Europe, so what does this really mean for the blockchain companies that are based in the US? This year, 2018, has indeed become the year of new regulations being incorporated, but this is not all as we are just getting started in this ever-growing market.
As a result, this should be very interesting to see what direction the market takes and also whether Europe will continue to blaze the trail in the current race.