Reuters reports that France is looking to help protect investors by building regulations on initial coin offerings (ICOs). The report does not outline any proposed or upcoming legislation, but it does give insight into the direction French regulators, and possibly governments worldwide, will take.
With the ICO industry exploding over the past year, most countries are mostly doing one of two things: they’re either banning ICOs (like China or South Korea) or exploring approaches. It appears that France sees regulation as a happy outcome, a path that’ll allow ICOs to continue operating while also removing scams from the industry.
When it comes to crypto, it seems there’s two main legal issues. The first is securities regulation, and the second is tax guidance. France looks to solve both, and hopes that ICO regulation will entice the cryptocurrency market to be more mindful of taxes. Fabrice Heuvard, a member of the French joint government-industry ICO task force, said that, “the community is ready to pay taxes as long as they are not confiscatory.”
It’s estimated that worldwide, $22 billion has been raised via ICOs this year. In France, there’s been only 15 ICOs launched, raising €89 million , and some hope that clear regulation in France would convince more projects to launch in the European nation. The goal of French laws would be to verify who’s responsible for the cryptocurrency’s issuance, determine if the issuers have a contingency plan in case the project fails, and make sure that ICOs are launched in accordance with Know Your Customer (KYC) and Anti-Money Laundering (AML) laws.
Earlier this month the country’s prime minister, Bruno Le Maire, tweeted out that new technology can’t be regulated using “ancient regulations.”
On ne peut pas réguler une technologie nouvelle avec une régulation ancienne. C'est pourquoi nous avons adopté des agréments volontaires pour les intermédiaires et les #ICO #EntretiensAMF2018
— Bruno Le Maire (@BrunoLeMaire) November 13, 2018
Cryptocurrency advocates seem divided as to what role regulations should play in the markets. Some people embrace them, while some oppose them. Either way, it seems that governments will want to get involved, especially so that they can stop the prevalence of scams. Henry James, deputy CEO of Fincross International, was quoted as saying:
A lot of token issuers are struggling against the stigma associated with cryptocurrencies: they are risky and present opportunities for scammers.
This hints that regulation could bring in more market participants to cryptocurrency, in the form of people who were scared off by scams. Recent United States Securities and Exchange Commission (SEC) actions have highlighted the need for clear government guidance on ICOs. In the past few weeks, it’s been found that the SEC is looking into Erik Voorhees’ involvement with SALT Lending, an ICO for cryptocurrency-backed loans. The SEC has also charged and fined two ICOs for launching unregistered securities, so it seems that after years of “laissez-faire,” regulations are coming.