The cryptocurrency market is slowly booming around the world. Although the cryptocurrency market is performing relatively well, many countries are still hesitant with acknowledging the market. The hesitation of many stems from the fact that not all states have rules regulating the cryptocurrency market, creating a grey area on how to manage potential risks and liabilities. Countries are now faced with an important decision of either (1) ban them; (2) allow them but leave it unregulated; or (3) come up with rules to eliminate risks.
The rise of the cryptocurrency market in France has left the government choosing to come up with rules to tame the effects of cryptocurrencies. Their decision will allow cryptocurrencies to be issued in France, with the condition that those backing them will agree to be regulated. France, in choosing this option, will be among the first major countries to control initial coin offerings (ICO).
The ICO regulation is a bold step for France and a big boost for cryptocurrencies. The rules will encourage more investors to trust the cryptocurrency market, as well as establish the credibility of ICO’s. It all sounds too good be true, and you might be thinking “What’s the catch?” Well, France will tax any profit these cryptocurrency companies earn.
In a statement by Fabric Heuvrard, one of the auditors working with the drafting of ICO rules in France, he provides that “The (cryptocurrency) community is ready to pay taxes as long as they are not confiscatory.”
The lack of better regulation and sanction left many cryptocurrency communities hiding behind the shadows, and the new rules seek to allow them to come out. Communities can officially launch ICO’s to raise money for new platforms or businesses, and coins issued in ICO’S can already form part as a means of payment in various websites.
There are two main steps and objective in regulating ICO. First, it is the goal of Paris to establish a market for companies to raise capital and expand their business. Through this, the state will be able to increase its tax revenues, and provide security for potential investors.
France isn’t alone in this initiative because Britain is also slowly following in its footsteps, but with a slightly different approach. Most of the ICO’s in Britain remain unregulated, and the financial watchdogs decide on a case to case basis whether the issuance falls within its authority. The U.S. Security and Exchange Commission also share the same goal of burning ICO’s under security rules. Although there hasn’t been a rule yet, their movement is set to begin shortly.
In a slightly different perspective, China and South Korea banned cryptocurrencies, due to fears of fraud and speculation. Without any regulations, investors in an unregulated market are defenseless and left without any legal remedy. Out of 2,080 cryptocurrencies in operation, nearly 900 are inactive and tagged as scams.
Through France’s regulatory proposals, these scams are set to be eliminated. Financial authorities can verify who is behind new coin issuance and reduce the risk of allowing fake ICO offerings in the market. Regulations are set to protect the consumers, investors, and the cryptocurrency market. Although the issue on tax revenue hasn’t been settled.
