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Regulating ICOs: Which Countries are the Worst?

13 May 2019   #Ethereum

ICOs are down and out this year, with total funding raised throughout the year sitting at 150 million. This is less than a single month's worth of funding last year, with the exception of December when the ICO market crumbled into the state it finds itself today.

While there are many reasons for that collapse, the state of regulations in the largest markets were a big reason for it happening. Restricting the supply of ICOs hurt just as much as demand waning from investors being burnt by scams such as "pump and dump schemes" or Ponzi schemes.

Regulation has been improving, slowly but surely, in all corners of the globe. Some countries outright ban ICOs while others take a much milder approach. There are countries that have simple regulations that foster a community and spur on innovation while at the same time there are those countries with laws so complex that they might as well have a blanket ban all cryptocurrencies.

ICOs are also seen as the perfect money-laundering front by many anti-money laundering operations in the world. There are very few regulators that see the positive sides of ICOs and the ongoing campaign by the mainstream media does nothing to help that image.

There are companies that are working on improving this image though. Recently, Harvard invested angel capital in a blockchain based startup that is looking to get its token offering an SEC A+ certification. There is a lot being done on the ground level to improve ICOs but it might be too little too late in the majority of the world.

China leads Asian banning charge

China banning ICOs was major news, not just because it closed one of the largest economies in the world to startups but also because of the caveats. The People's Bank of China stated that any altcoin raised via an ICO was to be refunded... immediately. This crushed a good portion of both the startup base and investor base in a country that is full of crypto community talent. While individuals are still legally allowed to hold altcoins, previous experience says that this might not last too long.

Nepal and Bangladesh followed China in banning ICOs, with Bangladesh specifically citing their 2012 Money Laundering Prevention Act as the main driver of their decision. Pakistan, despite having introduced a digital asset law recently still blocks banks and institutions from using altcoins.

Russia and US compromise with crypto

Two countries that have been coy regarding crypto are Russia and the USA. The USA might have fantastic financial markets and a whole boatload of money but the regulations surrounding cryptocurrency is one of the most difficult to work around. Most of the licensing is done on a state level, and no two states have the exact same rules.

Russia, on the other hand, has heavily controlled the usage of crypto across its massive landmass. They have looked at introducing a digital asset bill that would clarify a lot of things that are currently unknown but there has been a lot of bickering in the Duma.

France has shown that regulation does not need to be too heavy handed. They are forcing banks to open accounts for crypto startups, while also not putting too much of a burden on the average citizen when it comes to buying and dealing with cryptocurrency. It is far from opening up crypto as a payment option, but it has shown a clear path towards a better future.

The Indian government has also taken a two-pronged approach to crypto. While it allows normal people to use it it is generally discouraged. Banks and institutions are strictly prohibited from using any type of altcoin.

Author: Ali Raza for

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