Global ICO regulations

Regulation varies depending on the country. There is still limited guidance on regulation and despite it looking inevitable that it will be introduced, thus far it is still a largely unregulated industry.

Regulation differs between countries

ICO regulations vary widely by nation. In some countries, ICOs are totally unregulated. In countries like the United States, they are regulated gently and cautiously. In countries like China, ICOs are altogether forbidden. Every level of regulation in between these examples also exists. Furthermore, national regulatory environments are very fluid. Just as blockchain technology changes quickly, ICO regulation can also change.

Examples of regulation change

  • Example 1: Malta - Certain nations like Malta don’t regulate ICOs, or make such favorable regulations that ICOs thrive. Malta is a small island nation, without plentiful resources or natural industry. By creating a regulatory framework that favors ICOs, many blockchain companies have been drawn to Malta. This brings capital into the country, whose economy directly benefits. Other countries may be similarly friendly to ICOs, simply because they don’t restrict them in any way whatsoever. These tend to be smaller and/or developing nations.
  • Example 2: The United States - The United States has a “hands-off” approach to regulating ICOs. For the most part, ICOs are allowed to operate at their own discretion. However, the IRS and SEC have punished fraudulent ICOs in several cases. The Stock Exchange Commission has also created a definition that identifies some cryptocurrencies as securities. This puts some strictures upon the way these coins may be sold, and upon the tax burdens for the ICO company and its investors. The United States actively discusses blockchain technology in Congress, but seems hesitant to stifle innovation by prematurely regulating the industry. As the blockchain industry matures, expect America to create clear legal boundaries for ICOs.
  • Example 3: South Korea - China and South Korea have both banned ICOs outright. This is partially done to prevent fraud and to protect investors. Both nations are intently focused on technological innovation, so blockchain is not considered anathema by either. South Korea has given indication that it might reverse its ban soon, and China could follow at any time.
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