US House Representative Advocates for the Implementation of Friendly Regulations on ICO Projects
Warren Davidson, a member of the US Congress from Ohio, believes that regulatory bodies need to go easy on the ICO market. The representative said this during an interview with the Squawk Box program on CNBC. As per the Congressman, a less stringent regulatory framework will provide more certainty to the market, as well as spur its development.
Additionally, Warren reiterated the significance of defining the status of digital currencies. He specifically alluded to the recent declaration by the SEC that Ethereum is designated as a commodity, instead of security. Davidson, however, indicated that the absence of a clear legal framework could soon be solved, as the government is currently working on that front.
Importance of Favorable ICO Regulations
As mentioned above, Davidson is confident that lucid and favorable regulations will appeal to more investors without burdening projects with too many rules. In this regard, that coherent rules will save time and resources that would otherwise be used in lengthy compliance processes and tedious litigation procedures.
Furthermore, Warren stated that the lack of defined regulations substantially increases the riskiness and insecurity of the ICO sector. To this end, the representative said that sham ICO projects are likely to capitalize on the uncertainty to defraud uninformed traders. Nonetheless, Davidson is assured that if all ICO startups adopt the Know Your Customer (KYC) and Anti Money Laundering (AML) provisions, the prevalence of scammers will subside substantially.
Regarding the preference of cryptocurrencies by criminals as a means of funding their unlawful, acts, the Congressman refuted the allegation, albeit unconvincingly. He stated that criminals favored transacting in digital currencies due to their inherent advantages, such as swiftness, irreversibility and above all, anonymity.
Nevertheless, Davidson pointed out that it is possible to audit the trail of virtual currencies, referring to the recently closed Mt. Gox investigation. Also, Warren added that cash and hawala network transactions are harder to track than cryptos, and both mechanisms are legal globally.
What do Other Stakeholders Think?
Other leading personalities in the financial industry also commented on the opinions of Warren Davidson. Recently, Adena Friedman, the CEO of NASDAQ, affirmed that ICOs lack an explicit oversight authority and therefore pose a considerable risk to the investor community. Adan mainly blamed the SEC for imposing lesser regulations on ICOs as compared to IPOs.
Last week, Chris Concannon, the president of CBOE alleged that the ICO market is on the verge of undergoing a major regulatory shake-up. Chris warned that many projects could face severe legal repercussions if the SEC decided to classify token sales as unregistered trading of securities.