Posted on

EU Lawmakers Weigh 'Standard' for ICOs Under Crowdfunding Rules

Members of the European Parliament held a meeting on Tuesday to discuss a proposal that, if approved, would create new regulations on initial coin offerings (ICOs) held within the economic bloc.

The All-Party Innovation Group within the EU Parliament met to examine the potential benefits and issues with rules for ICOs that would form part of a wider crowdfunding framework.

As CoinDesk previously reported, the proposal was written by Ashley Fox, a Member of the European Parliament (MEP). Fox called for an 8 million euro cap on token sale proceeds as well as know-your-customer/anti-money laundering requirements.

Perhaps more significantly, if the regulations are adopted by the European Parliament, it could create a standard for token sales, allowing projects to raise funds and conduct business in any of the 28 member-nations.

“Be assured, that as legislators we’re trying to make ICOs more possible and more successful, that certainly is our objective,” Fox remarked.

France Digitale managing director Nicolas Brien said during the meeting that “there is an emergency to act” to create such a standard, explaining that “the market wants legitimization … from every jurisdiction. In the UK it’s particularly bad, none of the banks will bank you if you have crypto.”

Brien went on to explain:

“Having the certainty, but also having that legitimization, I actually welcome having a European-wide proposal because it gives people the certainty to know. I think we need to be clear whether this is a utility token or a transferable security, or how the regulator regime looks at that, but I think this can be done because an ICO is another form of crowdfunding. It’s different, but it is a form of crowdfunding.”

That said, the meeting also saw many of the representatives and regulators highlight the need for stricter scrutiny of ICOs, given the prevalence of scams that employ the blockchain funding model.

Laura Royle of the Financial Conduct Authority (FCA) said that “we certainly do see a huge potential benefit in this space for firms to raise capital from a broad array of investors and without the cost of an intermediary, but there are risks associated [such as] the potential for fraud, with a lack of transparency and the volatility.”

The FCA, in particular, has seen a “high proportion” of fraud, she continued, though exact figures are difficult to establish. The regulator estimates that anywhere from 25 to 81 percent of ICOs may result in fraud.

While no clear consensus on a path forward was reached during the meeting, European Parliament members can submit amendments to the proposal by September 11 – thus setting the stage for further debate.

European Parliament image via Alexandra Lande / Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

EU Lawmaker Wants to Include ICOs in New Crowdfunding Rules

A draft proposal by the European Parliament’s Committee on Economic and Monetary Affairs suggests creating new regulations for public initial coin offerings (ICOs), according to a document published Friday.

Ashley Fox, a Member of the European Parliament (MEP) representing the United Kingdom, wrote a draft report on proposed regulations for Europe’s crowdfunding platform operators and companies. Work on crowdfunding regulations has been ongoing since last year, with a formal proposal from the European Commission (the EU’s executive branch) coming in March with the mandate of developing a framework on “crowd and peer-to-peer finance.”

According to Fox’s note accompanying the legislative language for the proposal, the framework provides an opportunity to regulate token sales.

“This Regulation gives the opportunity to ICOs that want to prove their legitimacy to comply with the requirements of this regulation. Whilst this regulation may not provide the solution for regulating the ICO market, it takes a much-needed step towards imposing standards and protections in place for what is an excellent funding stream for tech start-ups,” he wrote.

The report states that crowdfunding service providers “should be permitted to raise capital through their platforms using certain cryptocurrencies.” However, while ICOs “offer new and innovative ways of funding,” they can also be used to “generate substantial market, fraud and cybersecurity risks to investors.”

The proposed regulation appears only to apply to public sales that raise less than 8 million euros, stating:

“…crowdfunding service providers that wish to offer an ICO through their platform, should comply with specific additional requirements under this Regulation. However, private placements, ICOs raising in excess of 8,000,000 [euros] or ICOs that do not use a counterparty do not fall within the scope of those requirements.”

These new rules would require platforms to create a cap for crowdfunding efforts and follow certain securities laws, according to the document.

Fox emphasized the importance of providing some regulatory guidelines for the space, noting that “at present initial coin offerings are operating in an unregulated space and consumers are at risk from fraudulent activity taking place in this market.”

While Fox published a draft proposal last week, he also wrote that he “believes that a number of changes should be introduced to improve the proposal,” adding that “this regulation is an opportunity to provide regulation for initial coin offerings.”

European Parliament building image via Alexandra Lande / Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

EU, US Lawmakers Tout 'Sandbox' Approach for Blockchain Development

International lawmakers speaking at CoinDesk’s Consensus 2018 conference today argued that regulatory “sandboxes” may offer the best approach for blockchain innovation in the absence of official guidance.

Speaking at a panel discussion on global jurisdictions, U.S. House Representative David Schweikert said that, while there’s as yet no fully clear relegation in place in the U.S. to govern cryptocurrencies and blockchain technology, that may not necessarily be a bad thing.

He told the audience:

“One of the greatest concerns now in Congress is crippling innovation with regulation – so the ‘fog’ we are in now may actually be beneficial.”

The lawmaker continued to explain that his own state of Arizona is already taking a sandbox approach, which allows applications of innovations including blockchain technology to be experimented with in a supervised environment with trusted business partners.

Indeed, lawmakers in Arizona notably brought a bill into effect as recently as April that would allow enterprises in the state to store their information in a blockchain-based system, potentially opening up the opportunity to boost a wider adoption of the tech.

Meanwhile, the situation on the European continent may be slightly different when it comes to advancing blockchain technology, although it is still eyeing the potential introduction of a sandbox approach in the future.

Also joining the penal discussion with Schweikert was Eva Kaili, Member of the European Parliament. Sharing her experience of working with EU legislators on advancing blockchain technology, she said “in the next few years we’ll have harmonization, sandboxes and regulation.”

However, one obstacle, as Kaili explained, comes down to EU lawmakers’ lack of knowledge on the subject of blockchain.

“It’s really difficult to educate every politician on blockchain technology … And plus we don’t have too many scientists within the European Parliament,” Kaili said.

Despite the difficulties, the MEP continued, the EU is moving to adopt the technology to benefit the region:

“We are still getting more member states to join our effort … to remove frictions and costs to ensure to blockchain technology is offering us great solutions.”

To that end, also in April, a group of 22 EU nations jointly formed a blockchain partnership under the European Commission to exchange information on the technology in a bid to create opportunities for adopting blockchain applications across the EU-wide single market.

Panel image via CoinDesk

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

EU Parliament Votes for Closer Regulation of Cryptocurrencies

The European Parliament has backed a move to bring closer regulation to cryptocurrencies such as bitcoin.

The parliament’s members voted by a large majority on Thursday to support a December 2017 agreement with the European Council for measures aimed, in part, to prevent the use of cryptocurrencies in money laundering and terrorism financing.

The parliament members passed the move by 574 yes votes to 13 no votes, with 60 abstentions, according to a release.

The new legislation seeks to address the anonymity of the financial technology by implementing rules for cryptocurrency exchanges, platforms and wallet providers. Under the measures, such entities must be registered with authorities and will to have to apply due diligence procedures, including customer verification.

Member of the European Parliament (MEP) and co-rapporteur Krisjanis Karins said in the release:

“Criminal behaviour hasn’t changed. Criminals use anonymity to launder their illicit proceeds or finance terrorism. This legislation helps address the threats to our citizens and the financial sector by allowing greater access to the information about the people behind firms and by tightening rules regulating virtual currencies and anonymous prepaid cards.”

Another co-rapporteur and MEP, Judith Sargentini, said that “billions of euros” are being lost every year to money laundering, terrorism financing and tax evasion and avoidance, adding that that money “should go to fund our hospitals, schools and infrastructure.”

Sargentini continued:

“With this new legislation, we introduce tougher measures, widening the duty of financial entities to undertake customer due diligence.”

The European Council’s December consensus agreement also proposed a range of new EU-wide penalties for those convicted of money laundering. The measure marked “an important milestone in the fight against organised crime at a European level,” a rapporteur said at the time.

European Parliament building image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Posted on

Global Blockchain Business Council Expands European Foothold

The Global Blockchain Business Council is ramping up its presence in Europe.

Announced today, the technology advocacy group co-founded by blockchain services firm Bitfury Group will host a blockchain-focused summit at the European Parliament in Brussels, Belgium, on Wednesday in conjunction with Eva Kaili, a parliament member from Greece.

At the event, the council will brief members of the EU parliament and representatives from the European Commission on the challenges and solutions offered by blockchain technology.

Launched in January at the annual World Economic Forum meetings, the group serves as a forum for educating government and business leaders on blockchain – a mission emphasized by Kaili in statements accompanying the unveiling.

Kaili said:

“Forums like this pave the way for comprehensive collaboration between the private sector and regulators that will enable innovative platforms and smart solutions to be developed – maximizing the potential that blockchain technologies can offer.”

In context, the conference is also the latest sign that EU governing bodies have taken an interest in the technology, holding hearings, commissioning research and exploring blockchain use cases.

The common market’s open approach to the technology will have important tailwinds for blockchain’s development and acceptance, noted Jamie Smith, chief executive officer of the advocacy group.

“The EU is the world’s largest economic bloc and among the most important regulatory and rule setting bodies in the world, and its position on blockchain technology will have deep implications across all 28 EU member states,” she said.

As part of today’s news announcement, the council also revealed it has finalized its incorporation in Geneva, Switzerland.

Royal Palace, Brussels, image 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.

Posted on

EU Report: Customs Agents Can't Monitor Cryptocurrencies

A draft report being developed by two committees in the European Parliament, the EU’s legislative branch, highlights concerns over the ability of border agents to monitor the movement of cryptocurrencies.

The report “on the proposal for a regulation of the European Parliament and of the Council on controls on cash entering or leaving the Union and repealing Regulation”, dated September 29, largely deals with cash, as well as other payment methods such as prepaid cards.

According to the text, the report is being prepared by the Committee on Economic and Monetary Affairs and the Committee on Civil Liberties, Justice and Home Affairs.

And while it offers no specific policy measures related to cryptocurrencies, the report cites them as a major issue for customs agents.

The report’s authors write:

“Despite the high level of risk posed by virtual currencies as evidenced in the Commission’s report of [June 26] on the assessment of the risks of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, customs authorities lack sufficient resources to monitor them.”

The in-progress nature of the draft raises the question of whether the remarks about cryptocurrencies will make it in the final version. Further, the document features proposed regulations for the monitoring of cash at EU borders, but in its current state no amendments related to cryptocurrencies specifically are included.

Flags image 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 [email protected].

Posted on

EU Budget Amendments Call For Millions in Blockchain Funding

As many as four blockchain-related amendments, funding various initiatives, could find their way into the European Union’s 2018 budget.

Public documents published yesterday reveal a proposal to use blockchain as a payments rail for an EU-wide free Wi-Fi access project, as well as funding proposals for two working groups dedicated to the tech.

There are actually two amendments related to the idea of using blockchain as part of the “WiFi4EU”, including one from the Group of the Progressive Alliance of Socialists and Democrats political party as well as the Parliamentary Committee on Industry, Research and Energy. The party has proposed allotting €10 million euros to the initiative, whereas the committee has proposed just €1 million euros.

The aim, according to the amendments, is to test “the feasibility and demonstrate the usefulness of using blockchain technology in the interaction between the EU Institutions and the citizens.”

The budget document goes on to explain:

“As a starting point, the project will aim at underpinning the voucher scheme of the Wifi4EU project with blockchain technology, allowing for transparent and traceable payment of EU funds to the private companies, which install the Wifi4EU infrastructure. It will also provide the citizens with the tools to examine the transactions registered in the ledger. It will rely on Open Source software and seek collaboration with Member States for providing blockchain services (also known as Govchains).”

WiFi4EU was first unveiled in May with a budget of €120 million euros, with a goal to offer free connectivity across the bloc over the next three years.

The 2018 budget also includes a proposal to use DLTs as part of humanitarian efforts by the EU to help companies and groups which aid “migrants [and] displaced groups,” among others. CoinDesk previously reported on efforts within the European Parliament to advance this use case.

The €1 million euro investment will also go in part towards companies developing DLT platforms which can aid the union in this effort.

An additonal €1 million euros will go toward the Horizontal Task Force on Distributed Ledger Technology, which aims to analyze how the parliament can effectively utilize DLTs applications. The task force was first announced in 2015, and was originally formed to watch the development of blockchain and DLT platforms.

Image Credit: Ikars / Shutterstock.com.

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 [email protected].