Category Archives: 2018 ICO

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European Commission Vice President Believes Crypto Has Place in Future

The vice president of the European Commission has said that “crypto-assets are here to stay” at the second informal Economic and Financial Affairs Council (ECOFIN) press conference.

Progressive

At the ECOFIN press conference in Vienna, vice president Vladis Dombrovskis spoke of the discussion between himself and other ministers, describing it as a “good exchange” with regards to the future of cryptocurrencies and initial coin offerings (ICOs).

In his speech, Dombrovskis said, “We also had a good exchange of views on crypto-assets. We see that crypto-assets are here to stay. Despite the recent turbulence, this market continues to grow.”

He continues, “In particular initial coin offerings, or ICOs, we see they have the potential to emerge as a viable form of alternative financing. Already last year, ICOs helped raise over 6 billion dollars in funding and this year this figure will be substantially bigger.”

These positive remarks are however underpinned by a somewhat cautious attitude; he highlighted risks such as investment protection, market integrity, as well as money laundering among other nefarious activities that regulators, governments and industries are trying to stamp out or protect themselves against.

Dombrovskis asserted that there is a “need to continue monitoring developments in this area”, calling upon international partners such as the Financial Stability Board or G20 to cooperate.

Describing the challenges imposed by digital currencies, he cited a common issue that has plagued the progress of legislation and regulation which is the classification and categorization of digital assets. This would determine “whether and how to apply existing EU financial rules to these new assets or if we need new EU rules”.

Crypto-competence

Australia has been tackling this issue head on, while developing a means to tax cryptocurrencies. Several steps were been taken to define digital assets in a taxable context as accurately as possible.

The US has been wrestling the issue in a similar manner. The Supreme Court of the United States ruled on 21 June that Bitcoin could be used as a currency; this came as a result of a hearing that debated whether stock options can be taxed the same way that cash earnings are.

Earlier in June, the US Securities and Exchange Commission (SEC) declared that Bitcoin and Ethereum would not be regulated as securities; the subject digital assets being classified as securities in the states has been an ongoing matter for some time.

At the tail end of the speech, the vice president said that there is an ongoing effort between ECOFIN and the European Supervisory Authorities that he called “regulatory mapping of crypto assets”. Member states are in support of the mapping effort and Dombrovskis is expecting the assessment to be concluded this year.

The European Parliament recently held an all-party meeting that examined proposals for ICO rules. No formal statements have emerged from this discussion as of yet, but the speech given by Dombrovskis appears to echo the progressions made across departments of the EU.

 

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This Year’s ICO Funding Has Exceeded All of 2017

Initial coin offerings (ICOs) continue to rise in popularity; in the first three months of 2018, ICOs have managed to generate more money than they did for the entirety of 2017. According to the data collected by CoinDesk, that figure sits at USD 6.3 billion, 118% of the 2017 total.

It appears that despite the numerous minor and higher profile controversies that ICOs have been tied to, the digital funding method is rapidly gaining confidence across the board. In the winter of 2017, the markets were piping hot and yet, ICOs were cooling off.

Uncertainties caused by ICO bans were partly to blame for the dip in confidence, especially the prohibitions from South Korea and China which are two very prominent market forces. This news further fuelled the doubt of cryptocurrencies and the technology being stifled entirely, but as the numbers show, ICOs are thriving.

ICOs on the rise

The data reveals a month-on-month increase from December, which was at USD 1.44 billion. In January, that figure rose to USD 1.79 billion; in February it grew to USD 2.38 billion, a significant rise which preceded a minor dip in March which brought in USD 2.15 billion.

The leap in the numbers can be attributed to the increased size and rate of the average ICO; Q1 of 2018 has already launched 59% of the total ICOs that were launched the previous year. However, it is important to note that the figure is slightly skewed – Telegram had a gigantic ICO which raised USD 1.7 billion, but minus that figure and Q1 2018 ICOs stand at 85% of the 2017 total, which is still no small feat.

So far in 2018, 200 ICOs have taken place, (343 in total for 2017) and most of them are raising less than USD 100 million.

Growing a global ICO consensus

The US has also provided positive insights into future attitudes towards ICOs; the chairman of the Securities and Exchange Commission (SEC) Jay Clayton made comments suggesting that ICOs are securities, and can be classified and regulated as such, reducing risk and encouraging blockchain entrepreneurship.

It’s is widely understood that ICOs carry a high risk for investors, especially to those looking in from traditional investment positions. At the heart of the ICO issue is global regulatory uncertainty. Without a global consensus on how to legally operate and tax ICOs, the modern digital fundraising method will still have some hurdles to overcome.

As the year rolls on, conversations regarding ICO and cryptocurrency regulations have gone from skepticism to intriguingly progressive sentiment; France, the United Kingdom, Japan, South Korea and other countries are looking to make ICOs and their related technologies safe and fair for investors. They have the foresight to see that the technology will flourish should the “bad actors” within the industry be forced to work within legal, regulatory frameworks.

 

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