While the blockchain industry is still in its early development stages, it’s not too soon to consider the factors that will eventually shape the winners and losers.
Legolas Exchange CEO Frédéric Montagnon has some thoughts on these issues. Legolas Exchange offers a new decentralized blockchain protocol which guarantees full transparency and prevents front running and market manipulation. Using features from both centralized and decentralized architectures, Legolas offers fiat support, strong authentication and simplicity.
Transparency is a guaranteed entry on any blockchain bingo card. All companies cite their commitment to it, and companies behind ICOs assure potential investors they believe in it above all else. That is hardly the case, Mr. Montagnon said.
“It’s interesting to notice how the blockchain technology values – which are security, transparency and auditability – differ from the reality of the cryptocurrency market. This world has been crippled with hacks, thefts, price manipulation and overall shadiness.
“This is sadly due to the lack of competent counterparts, who can and want to offer the best service levels possible. The solution to this problem is simply to push for clean solutions and professional counterparts in the cryptocurrency world, who offer a high quality service.”
Regulators from different countries are taking a wide variety of approaches to dealing with blockchain-based companies and ICOs. Some are taking a wait-and-see stance, others are encouraging it, while a few have actively discouraged ICOs at a minimum while trying to grasp what blockchain is all about. Governments should think very carefully, because the visionaries are already setting themselves up to be dominant players.
“The cold hard truth is that discrepancies in the fiscal regimes on ICOs creates a capital flight towards crypto business-friendly regulation,” Mr. Montagnon said. “It is often not the best way to protect investors and end clients of these projects. For example, setting up an ICO is pretty easy for investors, but doesn’t give them any guarantee whatsoever that their funds will be used for the purpose they invested them (ICO investments are formally a donation to a Swiss foundation, which then finances a technology company who takes care of the development of the product).
“Adapting to ICOs and the whole cryptocurrency industry is a huge opportunity for governments to attract capital, talent and create jobs. Let’s note the wise approach of the French AMF, who just released the results of a public consultation on ICOs.”
Mr. Montagnon urged regulators to see the many positives, including the support ICOs can generate at a crucial stage in a company’s development.
“In the traditional fundraising world, entrepreneurs and their team are alone until their product reaches the market,” he explained. “They can share the value of the companies with the public through IPOs, after several years of operations and often at a high price compared to early investors.
“In the ICO world, it is completely different. Entrepreneurs are supported by a huge community from day one and can share the value they create with the public from the beginning of the company’s life. It is both much more rewarding for the entrepreneur, and much more fair to the community, who get their fair share of value created.”