The EU timidly opens to Initial Coin Offerings (ICOs): funds based on blockchain
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It is a new form of raising capital. China and South Korea have already banned it, for investor protection. Switzerland and Singapore do not ban it and EU and U.S. have already issued warning notices. However, they plan to regulate it.
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To set up an ICO it is necessary to establish which blockchain is used and all the rules that must be followed in the various phases. Then it is necessary to announce the details of the financial operation, publishing a white paper, to indicate the content of the project that you want to finance with the ICO collection, the objectives, the amount of capital that you intend to raise and everything needed to put a investor to choose whether to participate.
Now the ICO issuer can start mining coins, which can also be sold through major social networks at the price set by the miner. While investors will be able to use both other cryptocurrencies and real money.
The issuing company releases the tokens by selling them on major cryptocurrency exchanges such as Kraken, Bittrex, Livecoin, etc. The value of cryptocurrencies can change until the day of actual release.
Once the sale is over, the company starts investing the capital raised in the project. In this regard, the investor’s position may be different according to the envisaged regulation. Basically, he may have the right to actively participate in a project or simply be a simple financier of the same and limit himself to reaping the rewards.
The EU proposes a regulation
The EU seeks to partially regulate ICOs, with a proposal for regulation on cryptocurrency markets (MiCA regulation) Here is the text of the Proposal for Regulation: COM (2020) 593 + ANNEX. Meanwhile, some Member States are introducing regulatory sandboxes to boost innovation, pending unique European rules.
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Understanding initial coin offerings: A new means of raising funds based on blockchain