EU Debating New Legal Standards for ICOs

ICOs initial coin offerings cryptocurrency blockchain

The European parliament has been considering initial coin offerings this week, with proposals that would create new regulations around how ICOs can be promoted within the bloc.

The parliament’s All-Party Innovation Group sat this week to consider the proposals, which would seek to regulate ICOs under crowdfunding rules, as part of an ongoing reworking of regulation around crowdfunding and similar funding models.

The proposals were drawn up by U.K. Conservative MEP Ashley Fox and call for a tightening of conditions around ICOs to include an eight-million euro funding cap alongside anti-money laundering and know-your-customer requirements.

But while the conditions may impose tighter restrictions on ICO promoters, the measures are designed to create a 28-state bloc with a level playing field for all ICOs across the region, in terms of providing a regulated model for legitimate ICO campaigns.

Rather than trying to restrict the sector, Fox said his objective was to allow ICOs to flourish within a regulated, controlled environment.

“Be assured that as legislators, we’re trying to make ICOs more possible and more successful, that certainly is our objective.”

At the meeting, France Digitale representative Nicolas Brien said the EU was crying out for regulation for ICOs, with countries like the U.K. singled out as being particularly challenging for companies promoting ICOs.

“The market wants legitimization … from every jurisdiction. In the U.K. it’s particularly bad. None of the banks will bank you if you have crypto.

“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.”

Amendments to the EU proposals can be submitted up to September 11, ahead of further discussions before the proposals become law.

Laura Royle from the Financial Conduct Authority, the U.K.’s chief financial regulator, said that the regulation was necessary to improve conditions around ICOs.

“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.”