We all know that any scientific-technological innovations have their pros and cons. Initial placement of tokens (ICO) is an exception, however, unlike other new technologies, the good and the bad by ICO usually appear in the most unusual situations and often have trade-offs.
First, let’s talk about the good, or the pros ICO. The beauty of ICO is that they are a good embodiment of the American dream — to be able to open a business and get rich. Only a new dream is real and she is better because she is democratic, the entrepreneur may become rich or poor, banker or farmer, man or woman, and all you need is a computer, a good business idea and the money raised at the ICO.
To enter the space ICO has no financial, investment or gender barriers. ICO doors are open to anyone wanting to raise money, it is only in 2017 with initial placements of the tokens managed to raise funds worth more than $ 3 billion.
Another important economic advantage ICO is that they allow startups to receive investments in the digital currency from any country almost instantly, therefore, the team ICO can immediately start developing technology.
This means that innovation can develop and advance much faster. In addition, the ICO can help to smooth the problem of wealth inequality by distributing funds among more people.
On the other hand, in the space of ICO hiding «the beast», the ugliness of which is in total disregard of the law.
Most ICO are violating many laws. Among the most egregious violations – failure to comply with constitutional legislation, depriving investors of the right to sue in case of disputes and violations of various international treaties.
A ICO do not comply with the laws on the protection of consumer rights. Investors are very rarely informed about the risks of ICO, the risks of technology, risks, totally dependent on exchanges or operators of purses, risks, burglary or theft, the risks associated with the inexperience of launching a startup team as well as the risks of regulatory or policy changes.
Violations of the laws on the protection of consumer rights may lead to loss of trust, this is particularly evident in fraudulent advertising – another area where the ICO do not comply with laws.
Most ICO are run as funds, but are requesting investment as a commercial company. By law, they can be a Fund and a commercial company. A ICO, in fact, represent nothing more than the issue of securities and are run in violation of the securities laws.
Lastly, investments and contributions from participants, the ICO is not paid virtually no attention to the policy of fight against money laundering, countering the financing of terrorism and sanctions laws, thereby endangering the international financial system.
ICO raise funds through cryptocurrencies transfer from one purse to another from anywhere in the world, and such investments can be fully anonymous, so the funding for the ICO can easily participate in a terrorist organization.
In this case, despite all the advantages of the ICO, the government sooner or later will strictly limit participation in them, and the play ends.
New laws with new technology
In fairness it should be noted that the ICO problem is not only in conformity to the legislation, there is also the problem of obsolete laws that do not have time to keep up with technology.
Although bitcoin was founded in 2009 to invest in learning the technology and to modify existing laws in order to maintain a reasonable innovation, including consumer protection, international trade, securities, resolution of online disputes and laws to prevent financial crime, while not resolved by any government.
In recent time, some countries are beginning to position itself as friendly to the ICO, but in most cases it is the state, known as a tax haven or shelter, and their friendliness to the ICO is not related to adoption of innovation, the relevant rules of prevention of financial crimes.
ICO need competent legal basis, and until the government does not allocate resources for the modernization of outdated laws, team ICO will follow the path of least resistance and raise funds with the help of the least problematic ways.
ICO will be improved
Anyway, in 2018, the ecosystem of the ICO expect big changes.
Regulators of all countries will more aggressively treat ICO, issuing illegal securities or extorting resources from citizens. Most likely, measures will also be taken (including criminal prosecution) against a team ICO (or exchanges, including their tokens in their lists), neglecting the policy of combating money laundering, sanctions and anti-terrorist measures.
It is also expected many civil claims against ICO, technologies or investments which never materialized. The movement reaches such proportions that tax havens and other similar shelters will also be forced to take measures to protect the financial system.
However, despite the many changes, the coming year promises to be for the ICO not worse than the last. It is expected that the planned regulatory actions will contribute to the optimization of the process as the ICO and its participants and will help to establish balance in the ecosystem.
May change and the industry itself, as the concept of the ICO will be improved. For example, the Creator of Ethereum, Vitalik Buterin recently proposed scheme of so-called «decentralized ICO» or DAICO. The idea is to implement the whole process of the ICO in the form of interactive smart contract, on which users can Deposit funds for a certain period «donations» and in return the tokens. However, in this part of the proposal Vitalik little different from the existing schemes of ICO. A significant difference is that the investors will not only be a passive payer, but will be able to participate in the automated vote on development project and to adjust the budget, which the developers will not be able to dispose of at their discretion. However, this concept while outlined in theory only, and will not soon appear the ICO, who will be able to implement it in code.