Initial coin offerings, cryptocurrencies, digital tokens – they seem to be all the rage now. Beyond being the latest trend, there are regulatory issues for the creators of these investments as well as for the investors. So, while those forming them are looking for the most relaxed.
“While some investors may look at regulations as unnecessary or even a hinderance, they can be helpful, especially for new investment instruments,” says Richard Cayne of Meyer International. “Scammers can hide behind complicated terminology and a lack of legal structures and ramifications.”
Not every country is embracing ICOs
As the technology and structuring of ICOs are evolving, many countries are carefully watching developments before jumping in one way or another. Many countries permit ICOs, but to what extent the governments have a hand in regulating the market varies widely.
Countries like the US and Singapore allow ICOs, but they have stringent regulations whereby, if an offering meets certain parameters, it’s considered a security and is regulated as such. Others may permit them, but like Israel, have set high tax rates for profits from ICOs. And then there’s places like Spain, Malta, Jamaica, and Luxembourg that are offering tax incentives and loose regulatory regimes to encourage ICOs.
ICO regulations are still developing
If ICO investing is not available in your country, you may be tempted to invest in one overseas. But, buyer beware. You may want to make sure you’re protected in case the ICO you invest in is not as legitimate as you first thought. For example, Australia and South Korea have active regimes in place to pursue ICO bad actors.
But from when this article was written to when you read it, there may be new laws and regulations passed regarding ICOs in any number of countries. So, as always, it’s important to do your due diligence and get some expert advice.