EU ICOs Rules
A proposal from the European Parliament’s Committee on Economic and Monetary Affairs suggests creating new regulations for public initial coin offerings (ICOs).
A draft regarding the regulations proposed for Europe’s crowdfunding platform operators and companies published recently, was wrote by Ashley Fox, a Member of the European Parliament (MEP) representing the United Kingdom.
The European Commission (the EU’s executive branch) work on crowdfunding regulations has been ongoing since last year. A formal proposal was released in March with the mandate of developing a framework on “crowd and peer-to-peer finance.”
The report emphasizes that ICOs represent “an excellent funding stream for tech start-ups,” but the draft crowdfunding rules may not provide an obvious solution for regulating the ICO space but simply represent “a much-needed step” towards introducing appropriate regulatory measures aimed at investor protection. The reporting framework creates an “opportunity” for “ICOs that want to prove their legitimacy to comply with the requirements of this regulation”:
“In order to allow for a competitive Union framework, crowdfunding service providers should be permitted to raise capital through their platforms using certain cryptocurrencies […] ICOs offer new and innovative ways of funding but can also generate a substantial market, fraud and cyber security risks to investors. Therefore, [ICOs] should comply with specific additional requirements under this Regulation.”
The proposed regulation seems only to apply to public sales that raise less than 8 million euros. The new requirements would not extend to every type of ICO.
“…crowdfunding service providers that wish to offer an ICO through their platform, should comply with specific additional requirements under this Regulation. However, private placements, ICOs raising in excess of 8,000,000 [euros] or ICOs that do not use a counterparty do not fall within the scope of those requirements.”