Every country realizes the potentiality of ICO token but at the same time it’s deteriorating image of being a scam has led many investors to run for their money now. To ease this perception about ICO development and rip the benefits of an ICO token as an investment, major countries worked out on laws and regulations to eliminate scam ICO projects and to control the investment flow. Continuing the three-part series, following are other significant countries which affect ICO market and have laws for ICO token investment:
ICO Token Rules in Australia
Australian government implemented a customer (investor) centric approach to control the unpredictability of Initial coin offering market. Moreover, each component of an ICO development process spread over with clear laws and guidelines for ICO development companies. Following are the official guidelines published by the Australian Securities and Investment Commission (ASIC):
- A strong prohibition is declared for ICO Development Company in Australia or companies from any other country not to mislead or misconduct any activity to lure investors or customers.
- ASIC includes ICO token and other crypto assets in Corporation Act’s Regulatory Guide 234, advertising financial products and services (including credit) and Goof practice guidance. These clearly state the legal obligation of misleading an investor or a customer.
- BitCoin is placed under Australian Law and is not considered a financial product.
Under regulatory guide 228, rights and prospectus of ICO token issuing company should be released, if ICO tokens are to raise company funds.
- A collaboration between ASIC and Australian Competition and Consumer Commission (ACCC) is performed to take actions against any misconduct.
- Under regulatory guide 228, rights and prospectus of ICO token issuing company should be released, if ICO tokens are to raise company funds.
- Under the Corporate Act and licensing laws, an asset-based token will fall into the derivative category, and a license will need by the company.
ICO Token Rules in Canada
Canadian Securities Administrators (CSA) explained ICO token regulations through a staff notice. First, it mentions that ICO regulations will be overseen on case-by-case and a “regulatory sandbox” will apply to each FinTech projects which do not fit under any national regulatory schemes. Following are some to look out for:
- Cryptocurrencies and ICO tokens are subject to securities laws based on the case.
- A temporary ban on the purchase of cryptocurrency is there until further guidelines by CSA.
- A cryptocurrency exchange market reflects the features of a marketplace then under Canadian jurisdiction’s securities regulatory authority, and it must go through a registration process or seek an exemption.
- A disclosure of prospectus, white paper, management information and other information related to ICO project is necessary for ICO Development Company in Canada.
- ICO tokens regarded as derivatives will need to comply with derivatives laws of Candian government.
ICO Token Rules in Switzerland
Swiss government did not release any regulations or guidelines to control ICO development projects. But a Hawkeye is on each project being released in the country and on issuers of ICO tokens coming from other countries to attract investors. The Financial Market Supervisory Authority (FINMA) published following guidelines to assess each ICO company and ICO projects:
- The assessment for each ICO token will be on the economic use of that particular token, to see if it matches existing market regulations of securities and derivatives or not.
- To prevent money-laundering activities, payment through tokens or cryptocurrency is allowed only when blockchain is used to monitor each transaction.
- Exchange of cryptocurrencies and ICO tokens for fiat currency or service lies under Article 2(3) of AMLA.
- If a token shows securities features when issued and assessed by FINMA, a license will be required from FINMA by ICO issuers.
ICO Token Rules in the United Kingdom
The United Kingdom took a cautious approach towards decentralized investment – ICO token. The Financial Conduct Authority (FCA) circulated a public notice to warn on high risks associated with cryptocurrencies and ICO tokens. Major national banks banned the exchange of cryptocurrency for fiat currency. Moreover, FCA decided that ICO tokens will fall under administrative boundaries of UK based on each case. Cryptocurrency exchange platforms and digital wallet Development Company fall under the anti-money laundering regulatory framework of UK.
One must complete “specified activities relating to specified investments” set in FSMA order 2001 (RAO).
The Gibraltar Financial Services Commission (GFSC) is one of the regulatory authorities of UK. It proposed a DLT framework aligning with principles declared by FCA. The structure guides ICO businesses to not to carry out any regulated activities before acquiring authorization or exemption from FCA. To do that, one must complete “specified activities relating to specified investments” set in FSMA order 2001 (RAO).
Apart from these countries, many countries are taking cautious steps to pass needed laws and guidelines as Initial Coin Offering can change how a country’s common man plans their investments over the years and how high net worth investors’ investment decisions can affect a country’s economic situation.
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