The current boom for Initial Coin Offering (ICO) and law or regulations guiding it will likely progress majorly in the United States and other global market or burst remain unseen. Initial coin offering major selling point is that it doesn’t go through banks or mainstream investors to raise money. In July, US SEC (security exchange commission) issued a bulletin that shows unseen or potential risks that berserk participation in an ICO. According to United States SEC, circumstances that surround individual ico; the tokens that are offered may likely be securities; if they are, offering and sale of digital currencies in initial coin offerings are subject to federal securities law, the SEC said.
The issued bulletin warns initial coin offering participants that scammer will likely use this new cryptocurrency and blockchain technology innovation to perpetrate fraud as it is easy for anyone good enough to create initial coin offering with blockchain technology that looks attractive and convincing yet it might be a scam in reality.
Asia nations are seeing or weighing the risk around initial coin offering and cryptocurrency as a whole and they are now resorting to banning ICO in their countries, China announced its ban of initial coin offering (ICO) 4th September, six government organizations and Bank of China said that initial coin offerings are illegal, unauthorized and recommended that companies or individual that has participated in this exercise or any ICO fundraising should return their money or coins. South Korea joined this trend as they ban all cryptocurrency-backed or based fundraising. Kim Yong Beom – vice chairman of South Korea’s Financial Service Commission said, “There is a situation where money has been flooded into a speculative and unproductive sector or direction”. Taiwan is also bracing for some strict regulations against initial coin offering as they fear the ban of ICO in China and South Korea may turn their own nation to den of drugs and crime as cryptocurrency is linked to these due to its ability to keep people transactions anonymous on the blockchain and they looking to get some regulation around ICO in Taiwan.
Asia nation abrupt stringent restriction on digital currency, the looming threats of the security exchange commission have led the cryptocurrency world to slow down a bit. China ban affects the value of bitcoin which immediately dropped 20 percent to later rebound. If another security exchange commission announces a ban on initial coin offering (ICO) or digital currency, firms are more likely to take their business to cryptocurrency friendly environment leaving a void in such particular economy.
These regulations and ban could actually damage the industry’s ability to grow, or slow down its growth also can change who are winner and losers. Charles Hoskinson said, “if the digital currency is here to stay, nations like Switzerland will become the new Silicon Valley of space while America and others will actually fall behind and lose this technological marvel.”