On Tuesday, the members of the European Parliament held a meeting to discuss a proposal which, if approved, is going to create some new regulations on ICOs or Initial Coin Offerings, contained within the economic bloc.
Examining the potential benefits and problems with rules for ICOs
The All-Party Innovation Group within the EU Parliament met to explore the probable interests, as well as issues with rules for ICOs which would form part of a broader crowd-funding framework.
As it has previously been reported, the proposal has been written by Ashley Fox, who is one member of the European Parliament (MEP). She called for an 8 million euro cap on token sale proceeds and know-your-customer/anti-money laundering requirements.
Maybe more importantly, if the regulations are adopted by the European Parliament, it is probably going to create a standard for token sales, permitting projects to raise funds and conduct business in any of the 28 member-nations.
Fox remarked that people should be assured that as legislators, they are trying to make ICOs more possible, as well as more successful which is undoubtedly their objective.
The market wants legitimization from every jurisdiction
During the meeting, Nicolas Brien, who is the managing director of France Digitale, said that there is an emergency to act to create such a standard, explaining that the market wants legitimization from every jurisdiction. In the UK it is particularly bad, as none of the banks is going to bank you if you have crypto.
Brien continued explaining that having the certainty, but also having the legitimization, he actually welcomes having a European-wide proposal, as it gives people the confidence to know. He also thinks that they have to be clear whether this is a utility token or transferable security, or how the regulator regime looks like that, but he believes that this can actually be done as an ICO is another form of crowd-funding. It is different, but still, it is a form of crowd-funding.
With saying that, the meeting also saw a lot of the representatives and regulators highlighting the need for stricter scrutiny of ICOs, given the prevalence of scams which employ the blockchain funding model.
About 25 to 81% of ICOs can result in fraud
Laura Royle from the Financial Conduct Authority or FCA said that they certainly 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 she also mentioned that there are risks which as connected with the potential for fraud, with a lack of transparency, as well as the volatility.
Mainly the FCA saw a ‘high proportion’ of fraud, Laura continued, though some exact figures are hard to establish. The regulator estimated that somewhere from 25 to 81% of ICOs can result in fraud.
While there was still no clear consensus reached on a path forward during the meeting, the members of the European Parliament can submit amendments to the proposal by the 11th of September, thus setting the stage for some further debate.