European Central Bank may adopt regulation to restrict ICO practices

6 October 2017

European Central Bank may apply strict regulation to the initial coin offerings, which are increasingly growing in popularity among startups seeking additional financing through crowdsale of the so called tokens. Ewald Nowotny, a member of the central bank’s governing body, unveiled that the bank plans to put ICO rules in place in a short term.

Talking to the weekly magazine in Austria, Nowotny noted that the ECB is considering the adoption of definitive legal restrictions as the spree created by the cryptocurrency market brings danger and is extremely shady.

Nowotny did not make it clear what regulation would be introduced and what controls the bank has to restrict the business activity closely related to ICOs. The report is made on the heels of the massive warning notices to investors in Europe explaining that participation in the ICOs may be risky, however, no European country has strictly banned the ICO practices yet. The only nations banning the ICOs are China and South Korea.

Initial coin offering is a process of raising funds initiated by some startups looking for financing without selling shares or interest in their startup ownership. ICOs allow startups to sell special digital certificates called tokens to interested parties with a view of future profits made either through dividends paid to investors or sale of the tokens at dedicated digital asset exchanges when their value grows.

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