As many countries across the globe continue to crackdown on Bitcoin and other major cryptocurrencies, Switzerland’s’ official financial regulator has published several guidelines that now allow for ICOs to be treated as securities.
ICOs, or Initial Coin Offerings, are means by which various prospective crypto technologies are able to raise money for themselves — essentially by issuing digital coins or tokens.
When we look back at the financial history of ICOs, we can see that by 2017 these offerings had raised a staggering sum of $3 billion USD for their owners.
As a result, the Swiss government has issued a set of guidelines that have been crafted to regulate the crypto market, and to allow many early blockchain projects to be subject to either anti-money laundering laws or be offered as securities. This will result in higher financial stability for investors, and will in turn also be able to attract more funding into the blockchain sector.
This move has generated a furor of excitement amongst financial communities worldwide. For example, Alexis Roussel, the CEO Of Bity — one of the two largest cryptocurrency brokers in Switzerland — has issued a public statement on the subject:
“This move has set the world standard for the global cryptocurrency economy with their new ICO guidelines, providing a solid framework for other regulators to follow. The rules are so clear now and we’re excited that FINMA has recognised cryptocurrencies as part of the new financial system.”
Similarly, the chief of FINMA, Switzerland’s financial supervisory body— said that their government recognizes the potential of blockchain technology and how it can go far beyond the realm of finance and payments. Thus, in a move to bring more regulation into the world of cryptocurrency, the government has introduced the new operational framework that will allow for blockchain-based projects to have defined legal boundaries to work within.
By allowing ICOs to be treated as securities, real innovators will be given a massive boost as they will now be able to navigate and explore the blockchain space via the use of an established legal system.
Why does Regulation matter?
It’s no secret that the ICO market has exploded within the past couple of years. Statistically speaking, there were over 900 ICOs launched last year, out of which an impressive 48% were successful in raising the required funds.
Not only that, another report stated that the ten largest ICOs of 2017 raised a staggering sum of $1.4 billion USD for their respective projects.
All of this development comes at a time when the South Korean government has cracked down upon the use of anonymous bank accounts for trading digital assets. Similarly, crypto groups in Japan have come together voluntarily to establish regulations that will help gain back lost public confidence, especially after the Mt Gox financial heist that completely changed the public’s perception of cryptocurrencies as a whole within the country.
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