Crypto News | ICO Regulation Looms Large

ICOs are getting more and more boxed in. For crypto entrepreneurs and startups, it must feel like they’re stuck in a room with no exit, while the walls are closing in, getting closer and closer. First Facebook banned ICO ads in late January, labelling them “deceptive” and “misleading”, and now it seems like more social media outlets may follow suit. And this is only the beginning. Stricter ICO regulation is on the horizon, designed specifically to make sure that ICO startups don’t make fraudulent claims in their ads.

In part, this is due to the industry’s apparent failure to self-regulate properly. With many token sales occupying the same space and targeting the same audience, it can be hard to distinguish the legitimate from the illegitimate ones. According to a recent report, between 46 and 59 percent of all ICOs launched in 2017 has already disappeared from the radar. As in, silent social media accounts, dead websites, disinterested community. In total, around $233 million was wasted on these failed projects. Even when we look at the usual failure rate of traditional startups – standing at 75% – only 20% of them fail in their first year! A lot of these ICOs were flat-out scams, with the developers simply disappearing with the money they raised.

In addition, ICOs are an ideal target for phishing attacks by hackers. Many are calling for internal ICO regulation, with ICOs implementing measures that would protect their customers from scammers that trick them into sending coins to the wrong addresses. Among other measures, experts argue that ICOs should emphasize only one communications channel for releasing sales news. Additionally, they should protect their own team from phishing attacks and use two-factor authentication throughout.

Nevertheless, ultimately, in any industry, and the cryptocurrency industry more than any other, it is up to the buyers to protect themselves. One way to do that is to be very meticulous in your research and to use the Terms and Conditions of ICOs to recognize scams. When installing software, most people click on “I Agree” without even thinking. But an ICO is not the same as installing Mozilla Firefox or Witcher 3. Before agreeing, make sure that the first paragraph makes it clear who the contracting party is. In other words, if you are the buying party, the first paragraph should be clear about the seller – and the one you will be legally able to sue in case the whole thing falls through. Additionally, look for anything odd, paying attention to the pricing, the terms of the sale, what happens to the profits, and so on. For the time being, when it comes to ICO regulation, you are the most important regulator.

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Author: Max Rothstein

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