According to a Bloomberg report, a list of strategies for the regulation of ICO (Initial Coin Offering) has been released by the a research group at Tama University, in Japan. The list also explains strategies to fully legalize the ICOs.
Guidelines for ICO Regulation
The list of guidelines includes regulations for:
- Tracking project development
- AML (Anti-Money Laundering)
- Identifying investors
- Protecting the debt holders and current detachment
The Financial Services Agency of Japan will be cautious on the proposal, as it could be ultimately made into the law just within few years’ time, Bloomberg reported.
The paper creates issuance rules, for example; defining and revealing methods following the development of white papers, and disclosing the possible impacts on debt holders, shareholders, and token investors. In addition to that, the paper specifies particular trading rules, including:
- Verification of customer’s identity
- Suitability (Know Your Customer)
- The allowance of industry’s wide-minimum standards on the listing of tokens.
- The restriction of biased trade practices such as insider trading.
Regulations will be Applied to Three Types of ICOs
While acknowledging that it is quite hard at this time to classify the whole legal ICO, as many are impending, the unidentified types might be still present. According to the paper, the rules will be applied to only three types of ICO:
- A large company type for in-house.
- A venture company type.
- An ecosystem type of joint exertions with numerous firms or government entities.
In the report, ICOs are clearly identified as securities and have the same position as the US SEC (Securities and Exchange Commission).
According to a researcher, Kenji Marashima:
“ICOs are groundbreaking technology, so if we can implement good principles and rules, they have the potential to become a new way to raise funding.”
One mentor of the study group is Takuya Hirai. He is a member of the leading Liberal Democratic Party, as well as, one of the planners of a regulation legalizing crypto-exchanges in Japan. Other members of the group are:
- Yuzo Kano, who is the head of bitFlyer Inc., which is the largest Bitcoin exchange in Japan.
- Mitsubishi UFJ Mizuho Financial Group Inc.
- Financial Group Inc.
- Sumitomo Mitsui Financial Group Inc.
The publication of these ICO-friendly guidelines is set against the positions of South Korea and China, as last year, both of these countries banned ICOs.