Initial coin offerings have always been a contested business model. It makes sense for companies to raise money this way. However, regulators don’t like this business model al that much. Indian market watchdog Sebi will crack down on such illicit ICOs in the future. It will be difficult to do so, as there is no official regulation in place right now. It is evident something will need to change in this regard sooner rather than later.
India is a critical region when it comes to Bitcoin and other cryptocurrencies. The country has a booming ecosystem in this regard. At the same time, there is a growing interest in initial coin offerings. This is a thorn in the side of local regulators. Especially market watchdog Sebi isn’t too amused by this business model whatsoever. The lack of regulation doesn’t make it easier to navigate these treacherous waters either.
Sebi Wants to Weed out Nefarious ICOs
For the time being, Sebi will crack down on illicit ICOs. While they don’t want to be the official regulator for this industry, something has to be done sooner or later. There isn’t much the agency can do right now, as cryptocurrencies are not legal tender in India. Their goal is to ensure users are not defrauded by fake projects which turn out to be scams in the end. Rest assured the number of fraudulent ICOs is a lot higher than people would expect.
In fact, several fraudulent ICOs have already been identified in recent months. Some even offer secondary trading in cryptocurrencies, whereas most simply sell empty promises. This situation has become unmanageable and a crackdown is the logical course of action. It is unclear which specific projects or individuals will be targeted first by Sebi. RBI is still working on active regulation for both cryptocurrencies and ICOs as we speak.
The initial coin offering industry has come under heavy fire in a lot of countries. Although this model has merit, it needs regulation first and foremost. Nothing prevents malicious individuals from scamming investors without repercussions. Coming up with proper guidelines for such a nascent industry is anything but easy. Most governments want to allow innovation but not too much either. It’s a very fine line to walk between restriction and innovation.
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