The Major Laws Blockchain is Going to Change
Experts reveal the current challenges ICO’s, cryptocurrency and the disruption Blockchain will have on legal and regulatory compliance in different jurisdictions.
Extract — Filmed as part of CoinTelegraph’s BlockShow Asia 2017
Panel host, Ivan Liljevist asks the Panel Experts some probing questions at the recent BlockShow Asia, a major Blockchain event in Singapore getting their take of how Blockchain technology will disrupt major laws on regulatory compliance.
The panel featured Anson Zeall, Chairman at Access and Co-Founder Coinpip; Matej Michalko, Founder and CEO of Decent Platform in Europe; our very own Sheree Ip, Legal and Blockchain Development at BitCar; and Malik Kotadia, Mentor with Finlab.
The following is an excerpt from the Expert Panel Session at BlockShow Asia.
Ivan — Q. What are the Biggest Regulatory Challenges you Face in Each of Your Businesses?
Michalko: The situation in China is difficult at the moment, a lot of Exchanges have been closed and there is a ban on ICO’s. The challenge is to explain our product is a Platform and the coin is just an intrinsic part of that platform and does not have characteristics of a security or ICO. It’s challenging to explain the token itself.
In Europe, we face challenges on how to exchange tokens properly. There is a strong limit on volumes, about 100K in Euro’s a day. Sometimes we need to exchange more than that for cash flow. And compared to Asia, Europe is a bit slow. There is no legal framework we can really base the exchange of tokens on, so it’s a little bit improvised basically.
Ivan - Q: What about BitCar, you guys are tokenizing Exotic Cars, what type of challenges are you facing?
IP: We started BitCar two years ago and we took the steps to do the proper research, research our market, get our token structure right and worked with the Regulators to seek opinions. So for us, we understand it’s a Utility token.
Education is a challenge in ICO’s to characterize tokens. We work in a field where laws are based on ‘What does it do?’ And we are working with tokens that do phenomenal things, the challenge is how do they fit?
I think we will see a lot of changes in laws coming soon or small amendments to make room for different types of scenarios. So I think it will be quite interesting in the next couple of years.
Question from the Audience: I want to get your opinion on whether ICO’s and IPO’s in different countries are scams?
Zeall: From Singapore’s Regulator standpoint, we have existing laws if the ICO that you’re doing falls into Securities and Futures Act you need to comply with that. If it’s not, and its a Utility then AML (Anti-Money Laundering) laws apply and CFT (Countering the Finance of Terrorism) you have to do.
From the Access (Singapore Cryptocurrency and Blockchain Industry Association) standpoint, we tell our members when doing ICO’s to follow certain guidelines. For example, you must get a legal opinion and you must have legal counsel. If the community chat requires you to do an interview, a ‘Ask me Anything Session’ to answer all the regulatory stuff, you have to answer everything.
Basically when things happen we need them to be transparent. If there are some companies within Access that are not following the rules and their intent is to scam, then definitely these members will be expelled. But I have to re-emphasize, a failed project does not mean it’s a scam. That’s why it’s important to see what projects you go into.
IP: We did everything required of an IPO standard for an ICO, even though it’s not necessary, Even though we’re not a security, purely token. It’s fine for us to do so, as we wanted to set a gold standard.
And because we’ve done that, we set the standard for everyone else following us to actually do the same. So now anyone in Australia doing it, will know they are going to be scrutinized if it’s not done the right way.
What ASIC have done is put out guidance rulings that if you are doing an ICO you could potentially be a major investment scheme. If you’re doing it, know that pre-existing laws exist and it’s up to you to figure out if you fall under any of these. And if you do, you need to take the right actions.
Provided you are doing something that’s right, working with the regulators, you’re looking at the regulations and not trying to skirt around the law then you’ll be quite welcomed in the jurisdiction. If you do what’s right and you get your legal opinion, get your advice, then I think a lot of jurisdictions will be quite welcoming in the future.
Zeall: One more thing to add…yes, we always compare ICO’s and IPO’s. IPO’s are usually at the very later stage in a company. Whereas ICO’s are usually kickstarter sort of projects. We should follow and reference to the IPO’s how the process should be done but if it’s done strictly as the IPO’s, then we actually need the fees. A lot of startups don’t have the fees to follow.
I’m not saying not to follow the IPO’s. The point is, in your whitepaper you should write your whole roadmap, have it very detailed and once you are through your ICO you must be consistent with your reports.
Consistency is the key, especially in the ICO space. Because your reputation is the main currency in the ICO space. Once it’s gone the second round is very hard to raise ~ Anson Zeall.
To learn more about BitCar, a world first in the tokenization and fractional ownership of Exotic Cars on the Etherem blockchain, visit https://bitcar.io/info.