The European Union has big-time legal concerns about the status of the Initial Coin Offerings (ICO’s). From one point of view, the vastness of the market prevents legal authorities to completely shut the industry down. From another though, the field is still considered vague and dangerous, and the biggest fear probably stays to be the alleged money laundering possibilities.
However, France has recently accepted official regulations on ICO’s, which would deal with documentation, requirements for the companies to launch a coin, dispute solving standards and naturally, constant observation and checkups of the procedures.
Now, Reuters reports, the EU will examine the market close by the end of the year and will decide how to regulate in 2019. The practice by now was watching every single ICO and researching it in a case-by-case fashion. But the method, adopted by the U.S. regulators, did not seem to work fine on the Old Continent. The policy of ‘laissez-faire’ and the expectations for a self-regulatory mechanism, did not show the financial market justice and additional precautions are needed.
On Monday, Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), said the organization is examining how the ICO’s play on the financial market and what is their role among the various range of financial instruments, according to the Reuter’s report. Researches state that only to mid-2018, in July, the ICO volume doubled its total from the previous year. Currently, the total exceeds $3 billion USD. The world’s leader in the ICO industry stays the United States but a significant part of the market is taken by the EU – 30% of the sum worldwide.
The detailed inquiry, Mr. Maijoor conducted showed that:
Some of these ICO’s are like a financial instrument. Once it is a financial instrument it comes under a whole regulatory framework.
He explained the importance of new regulations in front of the European Parliament’s economic affairs committee, the informational portal says.
The subsequent question is what do we do with those ICO’s that are outside the regulatory world. We will assess that as a board. We expect to report by the end of the year,
The chairman added.
The question of the legal status of the ICO’s stays. In the U.S. there is a legislative proposal for the ICO’s to be treated as securities (but which ICO’s, all of them or a certain type, remains unclear). In the EU though, some countries consider them as a kind of shares which is a problem. A European common market means the same rules for every participant country.