A Japanese study group published basic guidelines for ICO regulation, including rules for identifying investors, preventing money laundering, tracking progress of projects and protecting existing equity and debt holders.
What are the key points?
The proposal says ICO issuers should clearly lay out how raised funds, profits and assets will be distributed among token holders, equity and debt. It also calls for project plans to be tracked and changes documented.
The paper also defines some trading principles, including the confirmation of customer identity and suitability (KYC), the adoption of industry-wide minimum standards on token listings, and the restriction of unfair trade practices like insider trading.
Why is it important?
Unlike China and South Korea, Japan eyes ICO legalization. As the research group which proposed guidelines is backed by the government, the proposal can become a foundation for a long-awaited ICO law.
What can we learn from it
- ICO regulations are a hot topic for discussion, and the lack of legal basis was the key reason stated by companies like Google and Facebook when explaining crypto ad bans.
- Clear regulation is aimed to end the Wild West era on crypto market, finally legalize ICO as a fundraising tool and provide potential investors with legal protection.
- Japan is not the only country experimenting with crypto regulation. A few days ago, Australian regulators have requested digital currency exchange businesses to register and comply with anti-money laundering/counter-terrorism financing (AML/CTF) laws. https://goo.gl/Fz3VPs