Lawmakers in the European Union Look for New ICO Regulation Standards Using Crowdfunding Rules
Lawmakers in the European Union Weigh the ‘Standard' for ICOs Under New Crowdfunding Rules
The respective members of the European Parliament took part in a meeting on Tuesday. The purpose of which was to discuss a proposal, which, were it to be approved, would create new regulations on Initial Coin Offerings (ICOs) held within the economic bloc.
The group, known as The All Party Innovation Group, participated in the discussion within the EU Parliament in order to examine the potential benefits and issues with rules for ICOs that would form part of a wider crowdfunding system.
It was previously reported by a number of news outlets, that the proposal, as written by Ashley Fox, one such Member of the European Parliament (MEP), called for an 8 million euro cap on token sale proceeds, while also proposing the introduction of anti-money laundering policies and Know Your Customer (KYC) regulations to prevent malicious activity.
More significantly, however, was that if these regulations were accepted and adopted by the European Parliament, it would create a standardized system for token sales to occur within the 28 member nations, allowing them to raise funds and conduct business across all of the borders of the various nations.
“Be assured, that as legislators we're trying to make ICOs more possible and more successful, that certainly is our objective,” Fox remarked.
Nicholas Brien, the managing director for France Digitale, stated during the meeting that,
“There is an emergency to act' to create a universal standard, explaining that ‘the market wants legitmization… from every jurisdiction. In the UK it's particularly bad, none of the banks will bank you if you have crypto.”
Brien went on to explain:
“Having the certainty, but also having that legitimization, I actually welcome having a European-wide proposal because it gives people the certainty to know. I think we need to be clear whether this is a utility token or a transferable security, or how the regulator regime looks at that, but I think this can be done because an ICO is another form of crowdfunding. It's different, but it is a form of crowdfunding.”
With that being said, the meeting also saw a great deal of the representatives and regulators illustrate the need that arises for scrutinizing these ICOs, considering that there is a prevalence of scams that are being employed through this blockchain funding model.
Laura Royle of the Financial Conduct Authority (FCA) said that
“We certainly do see a huge potential benefit in this space for firms to raise capital from a broad array of investors and without the cost of an intermediary, but there are risks associated [such as] the potential for fraud, with a lack of transparency and the volatility.”
In particular, the FCA has seen the scale of fraud increase to hit a “high proportion”, she continued on to state that, though exact figures are hard to substantiate fully, the regulatory body believes that anywhere from 25 to 81 percent of all ICOs may result in some level of fraud.
At the moment, there is no real clear consensus on a direct path forward during the course of this meeting, the various European Parliament members can officially submit amendments to the proposal by September 11th, and will serve to set the stage for a further amount of debates between the MEPs.