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Regulators around the world are increasingly interested in ICOs. This creates uncertainty for both offerors and those who want to invest.
There are many completely legal reasons to invest in an ICO, ranging from the belief in the usefulness of a new cryptographic infrastructure to speculation about the rising value of money. A coin. Apart from these legal motivations, there is the practice of money laundering fiduciary. Unfortunately, the current lack of regulatory clarity means that many people who wish to invest in a project for its intrinsic utility in order to disrupt established industries for the better feel that they risk being treated as launderers. 39; money.
While the hope is that national legislators can strike the right balance between protecting citizens from scams and allowing capital to embark on worthy projects, it does not hurt ICOs with truly innovative objectives to exercise caution.
While national legislation is sometimes absent or unclear, Know Your Customer (KYC) is a widely understood concept in global finance.
Offerors must have at least the ability to access vital investor information. While the development of bitcoin from cryptorques is firmly based on the desire to free people from the dominance of governments and banks, this does not change the fact that trading partners have a legitimate interest in knowing certain information about their counterparty . terrorism or organized crime, in order to fulfill the necessary contract.
The OIC's regulations in the United States has been the focus of particular attention in recent months and KYC is becoming a requirement to guarantee the legal participation of potential investors.
There are five main reasons why this makes sense.
First the United States Securities and Exchange Commission (SEC) is preparing to institute proceedings against IFAs that are held without KYC procedures. In fact, there have been instances where the SEC has filed lawsuits and demanded refunds for sales of tokens that have not implemented KYC. In September, the decentralized Protostarr application may have been the first sign to cease operations because of the SEC's communication, signaling an intensification of regulatory scrutiny.
Secondly, cryptocurrency exchanges begin to exclude cryptocurrencies that have not properly implemented KYC processes. Thus, not performing such checks represents a long-term risk to a project. This month, the Financial Times reported that the GDAX, backed by the New York Stock Exchange, says that it "only provides for a small portion of the hundreds of new digital coins that were invented this year ".
Third If an ICO can demonstrate the good KYC, then it will be possible for all parties to establish their credibility with the banks and follow the anti-money laundering regulations. 39; money. Voluntary compliance gives a project and its participants a legacy of legitimacy with regulators and banks. This is the goal of DMarket's proactive approach to KYC.
Fourth KYC's voluntary compliance can help country offices reach a wider global audience and increase the number of jurisdictions in which they can be held. Such compliance makes it easier to reach investors in America, Great Britain, Canada and elsewhere. Even in the Isle of Man, which seeks to become one of the most permissive regulatory regimes in Europe, KYC has been declared as a requirement by the Department of Economic Development of the Island .
Fifth The US dollar remains the world's fiduciary currency and US regulators do not hesitate to punish the parties to any transaction that uses in a manner or manner. another a greenback. Even banks outside the United States treat the US rules as inviolable because the exclusion of the dollar clearing system is an option for any world bank.
Voluntary compliance with KYC regulations provides many benefits to the initiator and his investors, even though are not currently explicitly mandated to enact a such a process.
An example of OIC taking this proactive approach is SwissBorg where "the bulk of the team comes from the banking sector" and the protection investors and customers is paramount. Their KYC process is simple – the investor is welcome to subscribe and give his personal information such as name, address and date of birth. He will then be asked to download a piece of official identity and proof of residence (such as the official letter from the government). The personal information and the investor's identity proofs are then calculated and compared to a legal database.
Such an approach becomes the norm. Prog resio ICOs use online identity verification to validate the identity of the investor. In the end, it is in the interest of investors that KYC be realized properly.