Regulation 10 items
Regulations To Make Or Break Cryptocurrencies & ICOs (
This increase in regulatory efforts, however, means ventures and investors must proceed more cautiously on what kinds of crypto activities they perform or participate in. On one hand, this protects citizens and consumers from exploitation inspiring a more trustworthy ecosystem. On the other hand, this can also restrain innovation.

John McAfee, founder of cyber security provider McAfee who is a widely known Bitcoin backer and believer, said in a recent interview:

    Our income taxes are the greatest source of revenue, but if everybody’s using Bitcoin, the government doesn’t know what your income is. They can’t tax it, and if you choose to say I didn’t have anything, they cannot prove otherwise,” McAfee said. “It will eventually frighten every nation state, but it doesn’t matter what they do, there’s no way you can create a law or to legislate something that will stop Bitcoin or any cryptocurrency because technically, you cannot.

Acceptance and use still limited

Blockchain and crypto activities have flown under the radar until recently. As bitcoin surged in pricing and reached all-time highs this year, many have now gotten wise about cryptocurrencies. Companies also are aggressively getting into blockchain because of its game-changing applications across a variety of industries.

However, despite all this buzz, blockchain and crypto activities have yet to fully break into the mainstream. The average consumer a yet to use blockchain technologies and transact using cryptocurrencies on a daily basis. Crypto activities still remain mainly the niche of tech-savvy users.

There are also some major disagreements between Bitcoin's code developers, investors and miners in the debate about how to scale Bitcoin's protocol in order to accommodate the growing demand, which will result in a hard fork and a new "Bitcoin Gold" cryptocurrency.

Roger Ver, chief executive officer of, speaks at the Shape the Future: Blockchain Global Summit in Hong Kong, China, on Wednesday, Sept. 20, 2017. Bitcoin will probably see another splintering off in November as miners and developers debate how best to scale the cryptocurrency’s rapidly growing marketplace, Ver said in a Bloomberg Television interview. Photographer: Anthony Kwan/Bloomberg

While blockchain is supposed to be disrupting the financial services industry, there is a gap between what blockchain and cryptocurrencies can do and how customers perform financial transactions. Blockchain must provide ways for consumers to transition from the status quo. For instance, it’s not as if one can easily walk up to a bank and exchange dollars for bitcoin and vice versa.

Regulations can be stifling

Yet, even if traditional institutions would want to support cryptocurrencies, it would be impossible without clear rules and regulations. Banking is a highly regulated activity and laws may even have to be amended or passed to accommodate the use cases of cryptocurrencies. Blockchain players also argue that limited adoption is not a matter of lack of innovation on their part but due to regulations that limit their ability to bring their services to particular markets.

Among the appeals of ICOs as means of funding is the relative speed and ease blockchain startups raise resources to develop and eventually try out their business ideas. However, the days of rapid fire ICOs may soon come to a close, at least for some markets. China made a drastic move by banning ICOs and the SEC is clamping down on such activities in the US.

Until recently, the SEC had modestly issued an investor alert, warning potential investors that participating in an ICO is a very risky practice. Now that the SEC has geared up, in efforts to separate 'cash-grabbing' ICOs from legitimate startups, One of the most common ways which are used today in order to allow token sales to be compliant with US securities laws and for investors to participate in upcoming token sales in the US is SAFT - “simple agreement for future tokens”.

    The SAFT agreement answers many questions about participating in the crypto capital markets in a safe and regulated manner.  Companies with blockchain technology use SAFTs to approach accredited investors about backing their venture in exchange for future tokens. Marketing a SAFT is complex, and issuers should choose a platform with a proven track record. says Suleyman Duyar of SaftLaunch a U.S.-based company providing SAFT services.

This 'harsh' approach by the regulators does have some positive implications such as forcing blockchain startups to solidify their concepts and prove market viability first before being able to get public money. On the downside, startups without a war chest or access to other sources of funding may never get their projects up and running at all.

Tougher ICO restrictions also give other countries the opportunity to become havens for crypto activities and ICOs. Singapore and Japan appear to be cultivating more positive environments to support blockchain ventures thanks to proactive legislation.

Safety and security

Japan’s move to acknowledge bitcoin as a legal payment method has been a huge win for the crypto community. It obliged businesses including brick and mortar establishments to support bitcoin. In addition, Japan has also added provisions to enhance investor protection in light of previous incidences such as the Mt. Gox collapse. Japanese exchange Coincheck is also launching an investment program (page in Japanese) for blockchain startups.

Startups and ventures could follow these regulations as acts of good faith that they truly are offering legitimate services instead of quick money grabs. To be fair, the government has the responsibility to protect its citizens from dubious business practices. There are cryptocurrencies and token sales that were revealed as scams.

China’s outright ban appears to be quite extreme as it hampers existing efforts by blockchain startups to move forward with their projects. China must then quickly follow up with new legislation that would curtail investor fraud and yet open up the possibility for legitimate enterprises to thrive.

Balance is key

What is critical then is for the crypto ecosystem to strive for balance. Governments must not be stubborn that just because crypto activities do not fall into the mold of traditional financial activities that these should be considered illegal.

Instead, governments should work on regulations that protect consumers from fraud and exploitation. In addition, they should help and ventures by laying out clear regulations that allow room for innovation and easy compliance.

Blockchain is a powerful and useful technology. It would be a shame for businesses and consumers to miss out on the positives when governments restrict and ban crypto activities. Likewise, it would also be a shame if governments fail to protect citizens by leaving the industry unchecked.

This material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. I have no positions in any of the securities mentioned above.

Forbes covers several stories on the blockchain. Discover more and continue to page 2 of this article here: