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European Parliament Members, Blockchain Experts Meet to Discuss ICO Regulation

Members of the European Parliament along with blockchain experts met Tuesday, September 4, to discuss possible regulations for Initial Coin Offerings (ICO).

At the recent EU event entitled “Regulating ICOs — Is the Crowdfunding Proposal what we were looking for?” the attendees examined the potential complications currently arising in the ICO industry.

Ashley Fox, a British Member of the European Parliament, pinpointed three main issues to consider at the meeting: challenges faced by ICOs in raising capital, the existing regulatory approaches on the matter, and the future perspectives of the industry.

In his testimony, Peter Kerstens, chairman of the the European Commission’s Taskforce on Fintech, pointed at the “dramatic increase” of ICOs’ volumes in 2018, despite the increasing number of reports on fraudulent ICO projects. According to Kerstens, the growing figures mean that ICOs are “very interesting and promising vehicle instruments” for raising capital.

Kerstens stressed the fact that while the ICO industry faces mainly similar problems with other traditional funding activities, it is still different in terms of the amount of money that can be raised. As a major benefit, Kerstens stressed that while it is “extremely hard to raise millions of euros for a startup,” it is “not that hard” for an ICO project.

Addressing the issue of the main differences between ICOs and crowdfunding, Kerstens stressed the fact that ICO tokens are not “intermediated,” which means there is no third party between issuers and investors, posing the main subject of concern.

According to Kerstens, most of the aspects of ICOs “cannot be covered by crowdfunding proposals” due to the multiple differences between the industries as well as the uncertain status of ICOs as financial instruments, among other reasons.

Turning to the question of ICO regulation, Aeternity’s global communications expert Julio Alejandro has provided a “very original contribution,” claiming that there is no way to stop an ICO project from creation except by banning crypto exchanges.

Alejandro claimed that “you can complain, you can cry, you can believe,” but “the only way that you can actually stop an ICO from creation is stopping an exchange,” adding:

“Whenever you want to stop the diffusion and relocation of information, how are you gonna stop it? Are you gonna ban USBs, the computers? What exact are you gonna ban? You’re banning knowledge.”

Alejandro then stressed the benefits of the ICO industry that are highly valued by the crypto community, such as an ICO’s anonymity, borderless character, mutual transparency, and ability to operate without an intermediary.

Alejandro further stated that if any centralized organization “tries to regulate ICOs in some sense,” the industry would become “obsolete” from its technical perspective.

On September 7, economic and financial affairs ministers from the EU’s 28 member states are set to hold a meeting on the challenges posed by digital assets and the possibility of tightening regulations. The event, scheduled to take place in Vienna, Austria, will discuss the main issues around crypto, such as tax evasion, terrorist financing, and money laundering.

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Crowdfunding Firm Indiegogo to Sell Real Estate-Backed Security Tokens

The international crowdfunding firm Indiegogo will promote a new real-estate-backed token, according to a post on the company’s website.

The asset-backed cryptocurrency will enable accredited investors to buy shares of the St. Regis Aspen hotel in the form of digital tokens. According a report from The Verge, the upcoming digital token Aspen Coin is registered with the U.S. Securities and Exchange Commission (SEC), and will be available for purchase with U.S. dollars, as well as major cryptocurrencies Bitcoin (BTC) and Ethereum (ETH).

The crypto-based crowdfunding project aims to raise $12 million of investment for the St. Regis Aspen hotel, and is reportedly set to be launched tomorrow, August 24.

In December 2017, San Francisco-based Indiegogo announced the launch of the first Initial Coin Offering (ICO) pre-sale in partnership with equity crowdfunding website MicroVentures.

In the announcement, the company says that it partnered with Financial Industry Regulatory Authority (FINRA)-registered broker-dealer MicroVentures in order to ensure offerings are SEC-compliant.

As The Verge reports, co-founder of Indiegogo Slava Rubin said that cryptocurrencies and security-backed coins are “two very different things.” He also emphasized that asset-backed tokens are “less speculative and they’re likely to pan out in the future.”

Founded in 2008, the crowdfunding website Indiegogo is reportedly one of the first platforms to offer crowdfunding, allowing the public to invest and solicit funds for ideas, charities, or startups by charging a 5 percent fee on contributions. In 2016, the firm launched Equity Crowdfunding in 2016, which enabled “anyone to invest and actually own a piece of their favorite startups.”

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Goodbye Kickstarter? The Blockchain-based Project Aims to Challenge the Crowdfunding Sector

A new Ethereum Blockchain based platform called Acorn seeks to create an open, global community and marketplace for crowdfunding- opening it up to new participants such as those living in developing countries.

By incorporating P2P smart contract based governance, Acorn plans to supersede the current roster of crowdfunding platforms, and offer a service which will overcome geographic, political and economic borders. It also intends to mitigate any issues that may otherwise arise from cross-national jurisdiction and litigation.

According to the project’s team, use of the decentralized Blockchain for transaction verification/storage and a proprietary token currency (Acorn, ‘OAK’) means that “Acorn can bypass local taxation that would otherwise apply.”

“By funding through an ICO, and utilizing the Ethereum Blockchain, the Acorn Collective will eradicate the traditional three to five percent transaction fees and five percent platforms fees normally associated with other crowdfunding platforms, such as Kickstarter and Indiegogo,” the Acorn white paper states.

Acorn Hub thus incorporates all aspects of the platform’s crowdfunding infrastructure. However, the coin economy promises to deliver a handful of significant and related essential services. The Acorn marketplace for post funding product sales, without fees is one of them. Other services include marketing support and POS payments app allowing OAK transactions via smartphone.

When crowdfunding doesn’t fund the crowd

The crowdfunding phenomenon has had a huge impact on consumer-based industries in the past decade with its first generation of platforms pioneered by organizations such as Kickstarter and Indiegogo.

Starting as a purely community-oriented platform which reduced the barriers to entry (to concepts such as financial investment sourcing for the creation of original projects); the success of crowdfunding is such that it has even attracted the interest of multinational corporations.

Rather than directly relying on the “crowdsourced” income, these companies often use crowdfunding as a means of assessing public interest and potential sales of new products,  as well as a pitching tool towards the acquisition of traditional forms of investment, such as venture capital.

The growing popularity of this platform and the power with which the existing (centralized) market leaders hold has correlated with high fees, which are applied on top of any local taxes that may apply to you. Currently, individuals and SMEs are competing for funding with Industry veterans, which makes the extortionate fees a disproportionate barrier to entry for candidates with less funding and partnership to begin with.

These platforms have been hailed for the significant role they have played in lowering the barrier to entry for talented entrepreneurs seeking business funding to who may otherwise lack finance or partnerships.

Despite this, there are still many more barriers that exist, not only to existing users due to the basic fees and tax structure, but the millions who live in states and cities which the current market leaders cater to. The Acorn project could break down the borders in the crowdfunding sector.

ICO pre-sale

Acorn’s ICO pre-sale has been officially announced for launch on Monday Jan. 29 and will have been running through to Friday Feb. 19.  

The Public ICO will be a true test of public interest, and an example of crowdfunding the concept of crowdfunding itself; rather than other traditional forms of investment.

Daniel Mitchell

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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A New Decentralized Platform Helps Investors Enter the Over-the-Counter Ecosystem

Despite its growth in the level of awareness, how to enter the crypto ecosystem still remains a mystery to a lot of interested participants. Most people do not understand how to or where to find entry into a market that is filled with so many opportunities.

To this end, OnPlace, Russian-US-based company, is creating a decentralized investor community for customers to join, allowing for closed Over-the-counter (OCT) assets to be introduced to the market turnover and to create liquidity for them as well. The platform will create opportunities for investing into funds of the fastest growing tech companies around the world with low entry thresholds for the average person to access.

The nature of the crypto marketplace at the moment consists of independent assets scattered over numerous exchanges and platforms. For investors who are new in the industry, this arrangement can be quite disorientating. Having to jump between platforms in order to achieve ownership of tokens and crypto assets entails a cumbersome and sometimes discouraging situation. Therefore, having all processes harmonized on a particular platform that gives investors all the necessary options at a glance is indeed a welcome industrial development.

Unified investment platform

The OnPlace Private Assets Tokenization System (PATS) protocol is designed to tokenize over-the-counter (OTC) assets for customers to invest into. The protocol entails multiple steps firstly establishing a marketplace opportunity window (MOW), following the MOW there is a selection of projects to be tokenized based on the criteria and communal discussions of crypto-investors.

This system will allow the community of investors to make decisions in a decentralized manner in regards to the further distribution and motion of tokenized assets. The use of the protocol will mean that each decision in connection to transactions over tokens will be recorded in a network with its own Blockchain and will not be subject to change.

Letting investors have control

Every underlying asset implemented using PATS protocol will be represented by a separate private token and endowed logic of decentralized management of PATS protocol. This approach is based on the idea of creating a Decentralized Autonomous Organization, in which each holder of a token can directly affect the asset and determine further operations over tokens via voting.

Thus, each decision in regards to operating over tokens will be registered in a network and will not be subject to change. Together with the managing and monitoring functions, PATS protocol provides autonomous safety of investors’ balances from losing funds during the emission and closing of shares.

This setup by OnPlace is expected to solve one of the persistent problems that have hindered the mainstream adoption of cryptocurrencies. The solution that this project brings will allow investors to determine the closing date of an asset, add new assets for examination inside the community, vote for the emission of tokens of underlying assets or change the parameters of circulating tokens and produce equivalent trade of tokens of the PATS protocol directly, without using third-party stock exchanges.

This system enables the attributes of Blockchain technology by allowing investors significant control over the handling of assets that they trade.

Crowdfunding and token sale

Following its creation in 2016 OnPlace now has existing corporate existence in Moscow and the US, with a self-funded bank account of $200,000. Having established a team that developed an alpha version of their Ethereum Blockchain Contracts, launching a closed alpha for early investors, the company has attracted over $1 mln with their first wave of investors from a crowdfunding platform.

OnPlace is prepared to launch a TGE (Pre-Sale) in February 2018, providing customers with an easy way to invest into a number of companies from IT-related industries using business standards and cryptocurrency expertise.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Kickstarter ICO? Don't Count On It Says Crowdfunding Leader

The company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business.

Coming in response to the news yesterday that competitor Indiegogo would facilitate ICOs on its platform, supporting entrepreneurial efforts in this new area of fundraising, a Kickstarter spokesperson told CoinDesk that the firm isn’t looking to follow this lead.

“The answer is 100 percent a very firm no,” a company spokesperson said.

Since launching in 2009, Kickstarter has been used to successfully distribute $3.04 billion to creative projects, according to its self-reported statistics. It first crossed the billion-dollar mark in 2014. Total ICO funding so far is at $3.8 billion, according to CoinDesk’s ICO tracker.

Kickstarter offered few details as to the reasoning for the decision, ultimately directing CoinDesk to its charter, which has five planks.

The first reads, “Kickstarter’s mission is to help bring creative projects to life” and the fourth says, “Kickstarter is committed to the arts.” In 2015, the company insulated itself from pressure to make profits its sole priority by reincorporating as a public benefit corporation (PBC).

PBCs are a relatively new legal entity that protects companies that want to pursue a social mission as well as fulfilling their fiduciary responsibility to shareholders. We previously reported on Blockstack, which also reincorporated as a PBC.

In this way, shareholders in Kickstarter earn an income stream rather than hoping for a giant return on a big exit down the road. (The company has long committed to remaining private, and one of its three co-founders has compared a share in the company to owning the rights to a popular song.)

But despite any similarities, the company said this unique structure protects it from the temptation to leverage its brand for returns in the frothy ICO market.

“Not something we looked into or will look into,” the spokesperson said.

Kickstarter website photo via Shutterstock.

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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Crowdfunding Giant Indiegogo Opens to ICOs

Indiegogo, the crowdfunding website, is getting into the initial coin offering (ICO) game.

The startup revealed today that, through an existing partnership with MicroVentures, it will begin offering services around the blockchain funding model. The first sale is for the Fan-Controlled Football League which, according to its website, is seeking to create a user-driven model for American football teams.

Specifically, accredited investors purchase Simple Agreements for Future Tokens (SAFTs), with the tokens set to be delivered at a later date. The mode has been used by a number of ICOs in recent months, and according to the page on MicroVentures, $915k has been raised from 9 investors thus far in the new ICO.

The launch is a notable one given Indiegogo’s size and influence in the crowdfunding platform ecosystem. Indiegogo first went live in early 2008, and the move comes more than a year after it moved to offer access to equity crowdfunding.

Through this lens, Indiegogo is effectively moving to bill itself as a new hub for ICOs – specifically, those that are compliant with U.S. regulations around securities.

In statements, the startup said that the move to embrace ICOs was a natural fit given its crowdfunding work to date, noting:

“In some ways, cryptocurrency and blockchain technologies are poised to change everything. But for us, this is simply another way of doing what we’ve been working on for the past decade. It’s a powerful way to help people unite around ideas that matter to them, and together make them come to life. Now, we’re ready to become the go-to platform for selling and investing in digital tokens and blockchain-based assets, and we can’t wait for you to join us.”

According to The New York Times, Indiegogo is working with law firm Cooley LLP on the initiative. Slava Rubin, one of the startup’s founders, told the publication that “we want to bring a brand of trust to the entire industry” through the ICO initiative.

Image via Indiegogo

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Ethereum Founder Vitalik Buterin One of Bloomberg’s Top 50 Most Influential People

Bloomberg has issued their customary list of the 50 most influential people of the year, and this year’s list includes Vitalik Buterin, founder of Ethereum. Bloomberg’s Top 50 list includes some of the most important movers and shakers of the past year in any industry. Some of Buterin’s list-mates include Amazon founder and CEO Jeff Bezos, Crown Prince of Saudi Arabia, Mohammed bin Salman and CEO of both SpaceX and Tesla, billionaire Elon Musk.

Buterin’s inclusion should not be surprising. The cryptocurrency market has exploded, bringing Bitcoin and Ethereum from the shadows into the mainstream. Ethereum itself has reached all time highs in recent days, peaking over $470 per coin.

Disruption

While the tech wonder boy is just 23 years old, his revolutionary technology is producing waves in the financial industry, for startup companies and with computer programmers world wide. The rethought technology platform is gaining particular traction in the crowdfunding and financial sourcing industries. According to the list makers:

“Yet the potential for Ethereum to upend how computers move money continues to attract Wall Street’s attention. Already it’s altering how companies fund development: Ether is a popular vehicle for buying into initial coin offerings, or ICOs, which bypass the traditional routes of venture capital and initial public offerings (and, to date, securities regulation). It’s helped blockchain startups raise more than $3 billion this year.”

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ICO Token Rewards Policy Can Have Unintended Consequences, Pose Dilemma: Expert Blog

Expert Blog is Cointelegraph’s new series of articles by crypto industry leaders. It covers everything from Blockchain technology and cryptocurrencies to ICO regulation and investment analysis. If you want to become our guest author and get published on Cointelegraph, please send us an email at mike@cointelegraph.com.
 

Some cryptocurrency ventures promise prospective token holders rewards for acquiring and holding their cryptographic tokens while they simultaneously promote their cryptocurrency’s suitability for use in everyday commercial transactions. These cryptocurrency ventures double up on token use cases thinking that they are engineering a more valuable token: a token that is a form of currency that also rewards you for holding it. Instead, they create a token with conflicting fundamentals for unsuspecting participants in their ICO and potentially put their project in jeopardy.

Crowdfunding Competition

The problem is rooted in fundraising ventures issuing tokens that initially have no function or value. These rewards tokens are created purely to take advantage of the advances in crowdfunding provided by the Ethereum network and ERC-20 smart contracts.

Unlike cryptocurrency tokens that can immediately be used for something on a distributed network, rewards tokens are a purely speculative creation from their inception.

Token purchasers collectively assign value to rewards tokens based on their assessment of the possibility that the venture will make good on the promises in its white paper and online marketing materials. The dilemma surfaces as competitors, also fundraising, enter the marketplace. Since funds are scarce, these competitors need to signal that they are a better value to speculators.

For example, after the fundraising success of the first venture to promise a cryptocurrency debit card in a token sale, several competing cryptocurrency debit card projects followed suit. In order to differentiate their projects, each venture engineered more enticing rewards programs and appealing value propositions. Strategies included claiming to support over 8 different major cryptocurrencies to providing 0.2% rewards on card transactions.

Medium of Exchange

One competitor decided to establish relationships with real estate companies and obtained agreements requiring the customers of those realtors to transact business exclusively with their rewards token. In their white paper they guarantee that the rewards token will appreciate in value because of this scheme. However, they would need to continually invest in expanding the number of goods and services that use their token as an intermediary instrument, without financing benefits that mining affords proof-of-work networks like the Dash network.

In promoting the token as an intermediary instrument to facilitate the purchase, sale, or lease of real estate, the rewards token becomes a medium of exchange. However, the supply of rewards tokens is fixed. The supply is engineered this way so card transaction rewards are not diluted.

The venture guaranteed the token price increase, wagering that there would be increasing demand for the few houses that the token supply represents.

Unfortunately, it is a wager that assumes that the tokens provided sufficient incentive to change, perhaps intransigent, consumer behavior. For example, seniors are not likely to begin using cryptocurrencies to buy, sell, or lease property. It is too expensive a behavior change for consumers not in the young, male-dominated, tech savvy demographic that embrace cryptocurrencies. Instead the reverse is more likely. Demand for token-denominated houses will fall.

Even if adoption wasn’t an issue and demand was unaffected by the scheme, if the supply of real estate transacted using the rewards token decreases then the tokens become less valuable collectively. This scenario is very possible when demand for housing remains the same in the short term, but the cryptocurrency venture doesn’t have sufficient partner agreements in place to replenish the supply of units that have been purchased or leased. Under these conditions, the fixed supply of tokens represent an increasingly smaller supply of real estate, diminishing the collective value of the tokens.

Conflicting Strategies

Rewards tokens have different economic fundamentals. When a token offers rewards, there is an incentive to hold on to the token. The larger the expected reward, the higher the incentive to hold becomes. When many owners of the token decide to hold, the result is an appreciation in the price of the token. The reverse is also true. If many token holders decide to sell, there is a depreciation in the price of the token.

Assuming that the token purely represents the right to a portion of the future rewards provided by the venture, and is not used to buy and sell goods and services, its price would never be influenced by the supply of real estate.

When a venture decides that its rewards token should also support real estate transactions as a medium of exchange, it confounds its rewards strategy to a varying extent. The problem may be particularly acute if the marketplace for goods and services is relatively small in comparison to the expectations market for token rewards. Fluctuations in supply could have a disproportionate impact on token price.

Summary

Keep token policies simple. Imagine a world where Amazon’s stock could be used as a currency in the Amazon Marketplace. Moreover, imagine that it is also the only method of exchange permitted in the marketplace. Depending on expectations, a stockholder speculating on an increase in the value of the stock may not want to buy anything in the marketplace with their Amazon stock.

On aggregate, transactions in the Amazon Marketplace would drastically decrease if all stockholders held similar expectations to that individual stockholder. This dilemma is exactly what is created when projects simultaneously use a rewards token as a unit of exchange. Avoid it.

Bio

Munair Simpson is a business strategist and the principal researcher at Useful Coin Research. Munair lives in South Korea and enjoys teaching Capoeira when not obsessing about the future of finance. Munair graduated from the Wharton School with an MBA in Marketing.

Author: Munair Simpson

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Birdman Producer Plans MovieCoin

ICOs have been executed for cryptocurrencies with diverse applications – from supporting the cannabis industry (PotCoin) to Trump’s election campaign (TrumpCoin). The latest to join the ICO bandwagon is Christopher Woodrow, who has produced movies like the Oscar-winning Birdman and Hacksaw Ridge.

MovieCoin

The cryptocurrency Christopher Woodrow plans to create is aptly called “MovieCoin”. He aims to raise $100 mln through its Initial Coin Offering, which will be used to fund a portfolio of films. The ICO will be compliant with Securities and Exchanges Commission guidelines.The coins will be traded in the secondary market and are expected to appreciate based on the success of these films. Christopher Woodrow expects these tokens to democratize filmmaking – just like other ICOs have enabled common people to invest in early stage projects which were previously restricted to venture capitalists.

In a telephone interview to Bloomberg, Christopher Woodrow said:

“We’re trying to revolutionize the way films are financed… We’re in the process of putting together a slate of projects that will include A-list movie stars, top-tier directors, seasoned and established producers, and that will form the initial slate for MovieCoin.”

Blockchain in show business

This isn’t the first attempt to merge the cryptocurrency and show business worlds. It has long been speculated that the Blockchain model could be used to cut out the middlemen in showbusiness and give artists their fair share of earnings. AudioCoin, which aims to be cryptocurrency of the digital music industry, has a market capitalization of $2.8 mln. Musician Bjork’s latest album, Utopia, will be available for purchase through cryptocurrencies (Bitcoin, Litecoin, DASH, and AudioCoin). Various celebrities including Paris Hilton have endorsed ICOs. The glitz and glamour of show business seem to be a natural fit to the new age cryptocurrency businesses.

How is it different from crowdfunding?

The Blockchain and ICO model have disrupted multiple industries and Christopher Woodrow wants to do the same with Hollywood. However, movies have been produced through crowdfunding efforts before. Kickstarter lists 23,892 funded projects under the category ‘film’. So how is an ICO different?

If Woodrow accepts Bitcoin or Ethereum in exchange for MovieCoin, he would be able to tap a global investor base unlike crowdfunding models, which tend to be restrictive. Issuing a token also increases liquidity for investors as they would be able to trade these in secondary markets worldwide.