Gibraltar announces plans for world’s first ICO regulations
Gibraltar plans to introduce regulations on ICOs (initial coin offerings) which will be the first of their kind, worldwide. The Gibraltarian government will reveal the ICO ‘draft law’ in a few weeks, it said.
Gibraltar first to target ICOs directly
Lawmakers claim these will be the first-ever regulations to directly target the promotion, sale, and distribution of ICOs. The government intends to protect investors and consumers from the potential dangers of investing in ICOs.
Other governments – Hong Kong, for example – have launched public interest campaigns to alert citizens to the risks of ICOs. However, Gibraltar looks set to be the first to pass laws to regulate ICOs specifically.
The Gibraltar Financial Services Commission, along with members of the British overseas legislature continue to discuss how best to regulate ICOs.
Sian Jones, a senior advisor to the GFSC, told Reuters: “One of the key aspects of the token regulations is that we will be introducing the concept of regulating authorized sponsors who will be responsible for assuring compliance with disclosure and financial crime rules.”
The rise of ICOs
The rise of ICOs concerns governments and financial watchdogs around the globe. Indeed, many refer to the ICO market as a financial wild west, thanks to its unregulated nature and an abundance of scams.
In 2017, ICOs raised a total of $2.6 billion worldwide, up from $228 million in 2016 and many commentators expect this upward trend to continue in 2018.
The US senate is debating whether ICOs should be treated as securities and regulated as such by the SEC (Securities and Exchange Commission).
Setting the precedent?
It will be interesting to see if other governments follow suit once Gibraltar releases its draft law proposal.
ICOs are difficult to control because they are funded by cryptocurrencies and most cryptocurrencies are decentralized and encrypted. As such, transactions can be almost impossible to track so much easier, then, to regulate the way in which tech companies are allowed to conduct their ICOs.