Daily Management Review

Japan to legalize ICO


04/06/2018


The state-sponsored research group at the Tokyo University of Tama has submitted guidelines for the regulation and legalization of the scope of initial coin offerings (ICO) in Japan, reports Bloomberg.



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The relevant document sets out basic requirements for the identification of investors, measures to combat money laundering, monitoring projects in progress, protecting holders of securities and debt obligations. The Agency for Financial Services of Japan will consider the proposal, and it can acquire the status of law in a few years.

It is also noted that the issuers of tokens should fully disclose information on the distribution of raised funds and profits, as well as on the status of assets and liabilities. It is noteworthy that the document does not clearly define ICO-tokens as securities.

The document describes principles of granting guarantees, for example, principles of tracking progress according to white paper and determining the impact on potential investors. In addition, the paper establishes certain principles of trading, customer identification, minimum requirements for listing on exchanges and a ban on insider trading.

The research group included Takuya Hirai of Liberal Democratic Party of Japan, the head of the country's largest exchange bitFlyer Yuzo Kano, and representatives of financial groups Mitsubishi UFJ, Mitsui and Mizuho.

The research team proposes the above principles as the minimum measures to be taken. And in order to ensure the security of ICO for issuers and investors and the adoption of these practices in society, more detailed rules may be required.

Although the authors of the document recognize that "it is quite problematic to develop a single classification for all ICOs under existing conditions, since some types of such campaigns may be overlooked," they propose to single out 3 types of ICO: the type of venture companies, the type of ecosystems with participation of several corporations and government departments, and the type of large companies for high-risk projects.

In the document, tokens distributed through ICO are directly referred to as securities. A similar position is held by the US Securities and Exchange Commission. Researcher Kenji Marashima notes: "ICO is a revolutionary technology, so if we can adopt the appropriate principles and rules, they can be a new way of attracting funding."

Primary coin placements are a way to attract funding for blockchain-based startups, which, according to Coinschedule, attracted  8.8 billion in dollars from the beginning of 2017. However, due to a lack of accountability, some projects failed because many simply do not fulfill the promises given to their customers. But this did not discourage the interest of investors, driven by scammers who can sell their coins on stock exchanges.

source: cointelegraph.com






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