CATO, which is a non-profit organization, has recently released a proposal asking for regulation of ICO’s. The proposal asks for formation of a law in which the company which is issuing ICO has to clearly state if the cryptocurrency is security or a commodity. The proposal looks to negate any bitcoin loophole which is resulting in cryptocurrency frauds.
CATO is think than of liberals which is working in the matter of public need in society and media. The proposal was drafted by Diego Zuluaga, who works in the CMFA(Center for Monetary and Financial Alternatives). The main which the draft focuses on is that a organization which issuing cryptocurrency should clearly mention if the ICO token can be sold on any third party exchange before the ICO event finishes.
If the token issued in the ICO has to be considered as a security than the token should be given to the buyer and buyer should be able trade it on any other platform before the sale is over. If a organization abides by these regulations only than the token will fulfill the Howey Test and thus it can be considered as a security.
Report also states that any unfavorable regulations if imposed on the blockchain companies will result in the negative effect on the whole sector. If the laws are not friendly than it would discourage investors from investing in the sector, and thus this would have a big impact on the rate of growth of cryptocurrency industry.
According to a report published on News BTC, overall view of the proposal was that thought it is important to cover all the bitcoin loophole, unnecessary restrictions could lead to have a catastrophic impact on the industry.
Law Will Encourage Investments
Zuluga also stated that any such regulation should be created by Federal Government to not have any kind of interstate inconsistencies. Main aim of the regulation is to restrict any bitcoin loophole and promote the investors to look at the sector objectively.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]