The Organization for Economic Cooperation and Development has suggested the need for a uniform set of regulations controlling Initial Coin Offerings (ICOs) all over the world. Since ICOs have a rather international character, the body believes that global regulations are an absolute necessity.
It has published a report about ICOs recently, highlighting the conclusion about the organization believes ICOs are surrounded by “very high” risks. The report highlights how essential and imperative it is to have a uniform, standardized set of AML (anti money laundering) regulations and CFT (counter financing of terrorism) measures.
The report reads:
“A delicate balance will need to be achieved in the development or application of regulatory and supervisory requirements which do not deprive the ICO mechanism of its speed and cost benefits, particularly when it comes to smaller size offerings.”
Although many countries have taken individual measures to rein in the menace of scamming ICOs by introducing regulations, there has been no concerted effort that has been made by the global community in collaboration with one another. Thus,. OECD’s recommendation represents a global call for action regarding ICOs, a tool that is increasingly becoming relevant in the fintech space of today.
Referring to the burgeoning relevance of ICOs today, the report’s foreward notes:
“Distributed Ledger Technologies (DLT) like blockchain are a relatively recent
arrival in the world of finance, but are already driving new forms of financial innovation, new breeds of financial products, and creating new processes and platforms. Initial Coin Offerings (ICOs) are one of the most prominent applications of blockchain for finance, allowing for an innovative and inclusive way of financing for small and medium-sized companies (SMEs). Over the past two years the use of ICOs has gone from ‘too small to care’ to ‘too big to ignore’ for markets and regulators alike.”
While the OECD is pushing for better regulations surrounding the space, we must note that not all of the global community has been as receptive to the need for ICO regulation. In fact, recently, a meeting of the EU Economic and Financial Affairs Council saw a proposal for standardized crypto regulations fail to garner enough support.
As the report notes:
“International cooperation is also important. ICOs are global in nature and trade easily across borders. A more coordinated global approach is necessary to prevent regulatory arbitrage and allow ICOs to deliver their potential for the financing of
blockchain-based SMEs, while also adequately protecting investors.”