The EU intends to include ICO in the new rules of crowdfunding

The Committee of the European Parliament on Economic and Monetary Affairs has published a document, according to which it is proposed to create new rules for the primary placement of tokens (ICO).

Ashley Fox, a member of the European Parliament representing the UK, drafted a bill on the proposed regulation rules for European companies and operators of crowd-hosting platforms.

 Work on the regulation of crowdfunding is conducted since last year, and the official proposal from the European Commission is expected in March, together with the mandate to develop a structure of so-called "equitable financing", which will enable to regulate the sale of tokens.

"This Regulation gives the opportunity to ICOs that want to prove their legitimacy to comply with the requirements of this regulation. Whilst this regulation may not provide the solution for regulating the ICO market, it takes a much-needed step towards imposing standards and protections in place for what is an excellent funding stream for tech start-ups," he wrote.

The report says that service providers "should be allowed to raise capital through their platforms that use certain cryptocurrencies." However, while the ICO "offers new and innovative ways of financing," it can also cause "a significant risk to the market and the cybersecurity of investors, as well as the threat of fraud."

The proposed regulation applies only to public sales, which is less than 8 million euros.

"...crowdfunding service providers that wish to offer an ICO through their platform, should comply with specific additional requirements under this Regulation. However, private placements, ICOs raising in excess of 8,000,000 [euros] or ICOs that do not use a counterparty do not fall within the scope of those requirements." the bill says.

Under these new rules, platforms must create a limitation and follow certain securities laws.

Fox emphasizes the importance of providing some normative guidelines, noting that "today, ICO operators operate in an unregulated space, and consumers are at risk of suffering from fraudulent activities taking place in this market."

According to the legislator, the bill will be supplemented before consideration.

SOURCE