On September 5, the European Parliament had a meeting about creating new rules on initial coin offerings(ICOs) held by the economic bloc. The All-Party Innovation Group among the EU parliament tested the expected advantages and issues with regulations for ICOs that would form wider crowdfunding framework.
According to the CoinDesk, the proposal was written by Ashley Fox, a member of the European Parliament (MEP). Fox called for an 8 million euro cap on token sale proceeds as well as know-your-customer/anti-money laundering requirements.
If the rules are accepted by the European Parliament, it can bring up a standard for token sales, allowing projects to boost funds and conduct business in any country in the European Union. Fox added, “members are trying to make ICOs more possible and successful and this is our goal.”
Nicolas Brien, the managing director of France DIgitale, mentioned that the market wants legitimization from every jurisdiction. This situation is worse in UK because without crypto, no bank will invest.
He added the note that having the centainty with the legitimization brings positive views to people by giving them centainty. There sure be some consideration such as clarifying whether it is a utility token or a transferable security. However, ICO is another crowdfunding means. A lot of representatives and regulators agree on the necessity of stricter scrutiny of ICOs for the widespread outs of scams in the blockchain funding model.
Laura Royle from the Financial Conduct Authority (FCA) said, “it is important to be able to see a huge potential advantage for companies to grow capital from a unlimited range of investors and the fact that there are risks from possible scam with lack of transparency and the high fluctuation without the cost of an mediator.
The FCA has experienced a great number of fraud though exact figures are hard to build. Anywhere from 25 to 81 percent of ICOs will be considered as fraud.
Even though there has not been a confirmed agreement during the meeting, the European Parliament members can propose revisions until September 11 for the future discussion.
Author: Jieun Lee