US Libertarian Think Tank Urges Clarity with ICO Regulation ProposalJuly 5, 2018
CATO, a non-profit organization, has recently released its new offer for ICO regulation. The regulation is a power to push most of the US agencies to settle the issue of clarity. The US Libertarian Think Tank focuses on the issues of the public advocacy in society and media has recently released its two-tier suggestion in brief. The brief impulses the regulators to lay out specific rules which define when a cryptocurrency distributed through an initial coin offering is a commodity and when it is a security.
The proposal authored by Diego Zuluaga, a policy analyst, suggests that the classification should focus on the whether the digital coins offered are tradable on a secondary exchange or marketed as an investment before the completion of the ICO.
The first tier proposal covers a token that is promoted as the non-tradable acquisition of the commodity, which also entitles the purchaser to claim reimbursement if the product fails to launch. That would be classified as a commodity as long as there is no physical delivery of token made. Zuluaga also attempted to add some clarity to the tier proposal.
According to Zuluaga, all the contracts that qualify the set of standards would be closer to contracts as it would include the distribution of the cryptocurrency to the buyer the moment the application became useful. The proposal also suggests that all the digital currency which are already present in the circulation should be classified as a commodity – fully distinct from offerings that promise future distribution.
He even emphasized that finalizing the clarity is vital to the development of the emerging Blockchain technologies. According to him, such an approach would benefit the right balance between concerns about the fraud and the protection of customers while ensuring that the advantages of the ICOs are realized in the United States. The overenthusiastic application of the securities laws to the cryptocurrencies could raise the barriers to capital formation and investor access, which can have a great impact on the development of the cryptocurrency markets and technology.
Diego Zuluaga’s warning also highlights that a federal solution is needed to eliminate all the cross-state problems. He also pointed out that the absence of the federal guidelines states will build their regulatory framework, just like Wyoming. Thus, fashioning, even more, hurdles on the journey to clarity with all the ICO regulation proposal.