ICO or Initial Coin Offering is an innovative way to obtain fund, if business owners can assure people about the validity of their new products and services. ICO works like any crowdfunding project, but it’s still relatively unregulated.
Start-ups and investors can bypass well regulated and rigorous capital raising process, especially if the market is already well established. The high degree of freedom and flexibility also give scammers an opportunity. Also, not all exchanges pursue scammers actively and price can fluctuate wildly at times, masking artificial price manipulations. Everyone needs to bring some order to the table and offer transparency for all projects.
Investors and start-ups need to make sure that trading firms fully comply with existing exchange rules and perform extensive record-keeping. In some situations, funds will go missing in apparent crowdfunding stunts. The use of fund should be stated clearly before ICO begins. Everything must be made completely transparent in white paper. Cryptocurrency can also be seen as a two-way financial communication between investors and companies. There will always be people who not fully compliant and standardization must be created. Even so, cryptocurrency remains a dynamic platform and any innovation shouldn’t be restricted.
Unfortunately, any ban that blocks exchange can stifle innovation. Cryptocurrency shouldn’t also implement one-size-fits-all approaches. There should be enough support for sophisticated approach. Investor risks must be addressed, while ensuring that companies can obtain fund without any impediment. It has been shown that when it comes to virtual currency, we can address risks through framework licensing.
In ICO, regulation is a perquisite, especially if professional players are known to be aggressive. Regulatory objectives should include ensuring that everyone is treated fairly and it’s a win-win solution. Regulations should also be highly flexible, due to possible changes in the market. It will take more time before global ICO standardization becomes mature and robust.
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