Regulations For ICOs: A Good Or Bad Signal?

That’s the question: are regulations good or bad for ICOs and the cryptocurrencies world? The cryptocurrency investments have caused change in currency and trading markets. China has implemented a probably temporary ban on Initial Coin Offerings, something that has had a massively negative effect in the market. Meanwhile, the United States has not implemented much regulation as of yet. Thus far, the United States Security and Exchange commission has issued warning to investors.

But putting that aside: are regulations necessary and can they be beneficial? This article is not biased towards any position as it is simply presenting the facts so you can elaborate your own conclusions. Let’s start, and don’t forget that you can read more about cryptocurrencies at MarketReview.com.

In Favor of Regulations:

Let’s explore the reasons on why regulations may be beneficial for all of us.

Aimed to Protect Investors:

Let’s face it: plenty of ICOs are scams. They have no real use, their teams are not trustable at all, they have a very suspicious management of funds and investing into them is more like gambling and engaging in pump and dump schemes.

Thus, regulations have this goal to protect investors by keeping these deficient and scammy ICOs out of the field, because meeting all the rules and laws present in a regulatory framework is not very easy, so it means many scammers might be demotivated from launching them, but that’s just a supposition.

Attract More Investors:

If there are regulations protecting investors, then that create an environment of trust and security, something that will attract even more people to invest. People have a hard time understanding cryptocurrencies and let alone ICOs, so by creating such an environment, then it would be easier to educate people into this type of leveraging investments and invite them to participate.

Against Regulations:

Now let’s explore the other face of the issue, let’s see why they may be profoundly negative for cryptocurrencies and ICOs.

Reduced Freedom:

This is one of the biggest downfalls: it reduces freedom. Especially if we take into account that the USA, Canada and Singapore have opted for considering tokens created in ICOs as securities, something that subjects ICOs and their tokens to the same regulatory framework of these financial instruments. You can really see that your freedom is reduced when you have to go through a registering and licensing process.

It Increases Costs:

In order to comply with all the regulations and law, companies will have to hire lawyers, because in the case of USA, Canada and Singapore it is not easy to adjust to their regulatory framework. The same goes for the UK which, as it seems, is opting for the same route. By introducing regulations companies will have to spend more money into legal assistance and help.

It Might Harm Innovation:

By introducing a regulatory framework that forces companies to comply with several steps and laws, it may discourage innovators from launching their own ICOs, especially if we take into account that many countries want to attach ICOs to the same regulations exercised on collective scheme investments. ICOs are a great way to raise money, much better and faster than other options, and these regulations might take away all the attractiveness out of it.

Final Words:

ICOs have been banned in China and several countries are turning hostile towards them by introducing regulations that complicate the launching and execution of them along with the posterior emission of tokens. There are views in favor and against regulations, and in this article you’ve just read a good summary of them.

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