Regulators Wrangling Crypto Coins and Successful ICOs with Their Own Novel Challenge
The biggest debate around ICOs, coins and tokens has been what they really are. The real answer is that they can play so many different roles that they’re not like anything else. On top of which this blockchain technology allows us to create digital entities, or assets, which have no previous equivalent.
This is no help of course if you are a government officer trying to work out how these things should be treated for tax purpose, or a regulator trying to work out which of them will need regulation and how that should work.
Worse still there is no universally agreed taxonomy to guide governments and regulators on how to manage these elusive beasts – some of them are like something that has gone before, but with a twist, and some are so new that they require an entirely new approach.
Which is why some regulators, notably the SEC in Donald Trump’s America, have chosen to ignore the problem and treat all tokens as securities.
At the other end of the scale over in Zug, Switzerland, where they also know a thing or two about money, they have achieved something much nearer to the clarity everyone needs. Meanwhile the UK’s own FCA has, perhaps wisely, chosen to take some time to learn about these new innovations before jumping in.
Yet this lack of clarity is arguably the main reason we are falling behind globally, with less than two per cent of the 2,200 ICOs identified in the TokenInteligence.io database domiciled in the UK.
Last week in a fascinating interview for ICOrad.io, Sam Robinson, senior regulation partner at CMS, explained that it is perfectly possible for an ICO with a utility token to be run under UK regulation.
In fact 40 per cent of those just announced as launching in the FCA’s latest sandbox cohort are harnessing blockchain technology and a number of those with tokens.
But building a business funded by cryptocurrencies turns out to have a novel challenge of its own – an unintended consequence of AML (anti money-laundering regulations).
You may well have tens or hundreds of millions in the bank, or rather the wallet, in highly fluid cryptocurrencies, but how do you convert enough to expand fast, paying staff and buying from the pre-crypto economy?
Watch this space. I recently came across a highly experienced venture about to open the doors – so do get in touch should you find yourself sitting on a pile of crypto with a similar problem.
Please Tweet/Telegram questions to
@BarryEJames or listen at ICOrad.io.
