Issuing Initial Coin Offerings (ICO) used to be simpler in the past. Regulators looked past it and most people were not quite interested in the world of cryptocurrencies, bar a few opportunistic investors who saw limitless wealth where there were previously no riches. It is understandable that with the increased scrutiny into cryptocurrencies, people are now beginning to debate the legality of everything. With no clear regulations in sight, however, everyone should be extra careful about how to handle their own forays in the realm of cryptocurrencies.
Imagine that you have moved to another country and you are a freelancer. The truth is that everything is messy. You are not quite sure how to handle the influx of local legislation; you may be struggling to obtain a resident card or another document. Eventually, however, you will realize that taxation is mandatory. In addition, even though no-one would take you by the hand and gently remind you that you ought to pay your taxes, you will eventually find out that you should.
The question with launching an ICO can be boiled down roughly to the same prescience you need to exercise when it comes to managing your own finances. Let us take a brief look at what an ICO is.
In recent years, ICOs have been used to propel a number of promising ventures. Start-ups have been quite tempted and pleased to try a zero-risk funding round way of accumulating starter’s capitals. ICOs have largely used Ethereum blockchain to make sure that they will collect specific tokens to propel the company on a course to success. Naturally, ICOs may spill from tech giants to video games enthusiasts, and lastly even celebrities.
The Security Exchange Commission (SEC) Watches Over You
For good or for bad, the Security Exchange Commission (SEC) has recently taken an increased interest in the dealings of cryptocurrencies. You will not be surprised then to find out that you may be liable to prosecution if you fail to meet certain regulations. SEC now has presented detailed guidelines for an ICO that have to be followed to the letter. For the most part, you will have to ask yourselves several mandatory questions:
- Is the product legal? Is it subject to regulation, including rules designed to protect investors? Does the product comply with those rules?
- Is the offering legal? Are those offering the product licensed to do so?
- Are the trading markets fair? Can prices on those markets be manipulated? Can I sell when I want to?
- Are there substantial risks of theft or loss, including from hacking?
Some people may find the intervention of a government agency as too extreme, but the realities here are that someone should exercise control over the whole process and it is understandable why the SEC has taken it upon itself.
Regulating ICOs and Cryptocurrencies in General
It has been the perennial prey of the crypto world – regulation. How is the sector regulated while retaining all the benefits that these chunks of digital gold bestow onto people? It will be rather difficult to come up with a definitive answer, but from the standpoint of legal authorities, crypto owners should declare their wealth they hold in such assets and even pay taxes on it.
So far everyone has managed to withstand the incursions of regulators well enough until people thought that they could run their own fraud schemes, which may now give more teeth to authorities to intervene completely legally and seek accountability from individuals.
Should governments have more say in cryptocurrencies, their, that is to say cryptocurrencies’ main advantage may be severely undermined. Anonymity is a libertarian dream, which unfortunately may be hampered by human nature.
Greed has been reigning supreme over most operations. Even the private launches of celebrities’ cryptocurrencies can be partly perceived as riding the wave of crypto gold. Instead of coming up with a meaningful way to integrate cryptocurrencies, people are trying to get rich out of thin air without anything to back their claims.
What Does the Future Hold for ICO
We do not advocate surrender to exterior forces into your private ICO or crypto dealings. However, we advise caution when it comes to trying to stay on the same page with the law. You will certainly need to meet regulatory demands as you set out to carry out your own tasks in full. Trying to skirt those may come to haunt you later on. With more scrutiny and clarity in the private sector of cryptocurrencies, you may soon find out that governments and central banks have more say in what is going in crypto deals than all the involved parties. This is not an entirely bad thing. Meaningful regulation is sorely needed. Going to any extremes, on the other hand isn’t.