Ashley Fox, MEP, the UK representative, has written a draft report on the proposed regulations for operators and companies in Europe crowdfunding platform. Work on the legislation on crowdfunding has been ongoing since last year, with a formal proposal from the European Commission in March, with the mandate the developing a framework on the crowd and peer-to-peer finance.
According to Fox’s note associating the lawmaking language, the structure offers the possibility for regulating token sales.
“This provision allows the ICO that want to prove their legitimacy to meet the requirements of this regulation. Although this regulation might not create a solution for the ICO market, it gives an indispensable step towards standards and protection for what constitutes an excellent funding solution for start-up technology companies, “he said.
The report says the crowdfunding service providers should be allowed raise fundings through their platforms using cryptocurrency capital. While mutual funds offer new and innovative forms of financing, they can also be used to create significant market, fraud and cybersecurity risks for investors.
According to the document, these new rules require platforms to limit crowdfunding efforts and to comply with certain securities laws.
Fox emphasized the importance of providing legal guidelines for the sector, noting that today’s initial ICOs are operating in an unregulated space and consumers are at risk of fraudulent actions taking place in this market.”
While Fox released a draft proposal last week, he also stated, “He believes that a number of changes need to be introduced to improve the proposal,” adding that this regulation is a prospect to present set of laws for the initial public offer of coins.