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France Coming with an ICO Friendly Legal Framework

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France is crafting a legal framework to regulate initial coin offerings. In a post, finance minister Bruno Le Maire says he has tasked Jean-Pierre Landau, a former central bank official to draft a legislative framework.

“France has every interest in becoming the first major financial centre to propose an ad-hoc legislative framework for companies making an Initial Coin Offering,” he wrote in the French website Numerama.

An action plan is set to be presented in a few weeks according to the minister. Market regulators are set to be given powers to authorise companies to raise funds by issuing tokens as long as they respect certain parameters and provide certain guarantees. Those who do not apply for the licenses will not however be banned.

ICOs to be Considered Legal

Under the framework, ICOs will be officially recognised as legal investments. This marks an about-turn from a harsh stance by the regulator AMF (l’Autorité des marchés financiers), had taken towards ICOs. The body recently shut down several websites for marketing ICOs as investments.

The move is set to protect investors from fraudulent ICOs in the largely unregulated sector by providing a “white list”. The framework will be non-dissuasive, the minister told Les Echos.

Centre for ICOs

By putting in place the necessary legal framework, France hopes to be the centre for initial coin offerings. In the post Le Marie noted the huge potential for start ups to attract funding through ICOs.

France legalised the use of blockchain to transfer securities last December and is set to be one of the most progressive jurisdictions for cryptocurrencies. “France has every interest in becoming the first major financial centre to propose an ad-hoc legislative framework for companies making an Initial Coin Offering …We should not miss out on the blockchain revolution,” Le Marie said.

The move marks a departure from an increasingly harsh stance towards the sectors in other countries such as the US. Countries like China and South Korea have banned ICOs altogether. Japan is increasingly clamping down on cryptocurrency exchanges operating in the country and has ordered a number of them shut.

ICO

France will now join other jurisdictions like Switzerland, Cayman Islands and Gibraltar with friendly cryptocurrency legislations designed to attract start-ups.

G20 Members to Form Crypto Taskforces

A meeting of finance ministers and central bank governors in Buenos Aires has called for wider regulation of the sector to prevent use of cryptocurrencies for illegal activities. The G20 member countries will form taskforces and report back with proposals by July.

Initial Coin Offerings or ICOs is a way of raising funds where companies issue digital tokens in exchange for money or cryptocurrencies such as bitcoin. They can be understood as IPOs but without the stringent regulations and the tedious paperwork that accompanies it. There are differences however. IPOs are typically initiated by relatively well established companies with tangible products.

ICOs, on the other hand, are launched by start ups often with no tangible product or testing. They are more similar with venture capital but with the funding coming from small donations from a large number of investors.

They have become popular way of raising funds and more than $4 billion is estimated to have already been raised in 2018.

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