Last week I was invited to join the discussion, at the European Parliament, about the way forward with regulating ICO’s in Europe. The debate was motivated by a draft report which proposed a new framework of regulation on crowdfunding through regular crowdfunding platforms and ICO’s.
The debate resulted in some heated episodes and appraisal as well. In between I had the opportunity to bring the point across that the proposed regulation focuses on the old paradigm — with a large role for central parties — not the current one — using blockchain infrastructure.
The regulation seems disguised as low risk as it is presented as opt-in regulation. Unfortunately many regulators in the EU are not up to speed regarding ICO’s nor blockchain technology in general. This became strikingly clear as the attendance of regulators from the EU nation states during the debate was very low. It is likely regulators throughout the Union will interpret the ICO parts of the proposed regulation as an advice and they are likely to adopt these policies as-is if they do.
This is risky as currently technology is in the last stages of development that nullifies the usefullness of the proposed regulation. Distributed Autonomous ICO’s, or in short DAICO’s, banish some of the risks the proposed regulation tries to mitigate.
If EU member states decide to opt-in and use this body of regulation regarding crowdfunding they risk losing the technology race before it even started, as the primary effect of these proposed regulations on ICO’s will result in unnecessary overhead in the shape of bureaucratic paperwork. This will eventually drive innovative parties like startups out of the Union.
Fortunately I was able to get these points across during the debate. Now let’s hope they are being included in the final draft and things work out for ICO’s in the EU.