Yesterday, Russian blockchain technology firm Waves announced plans to establish a “new self-regulatory body to set standards for ICOs.” The yet-to-be-named association would be tasked with creating standards for “reporting, legal, tax & accounting, KYC and business due diligence” specifically for ICOs and other companies working in the blockchain space. The organization is being backed by Deloitte CIS (the financial service company’s Russian branch), the ICO Governance Foundation (a voluntary ICO registration group registered in Switzerland), and the Ethereum Competencies Centre (a project that doesn’t seem to have an online presence, but which may be another name for the Ethereum-supported blockchain lab at Russia’s Nationwide University of Science and Technology).
Waves does have some experience in the ICO space, raising $16 million in a crowdsale last June. (The Waves token has done well since, and currently has a $1.4 billion market cap.) Built on Ethereum, the Waves Platform aims to allow startups to create their own funding tokens quickly and easily. It’s not hard to see why a company like Waves would be seriously interested in having a say on future ICO policies and regulations.
According to the blog post, the association will be based in Switzerland, and will be open to ICO exchanges and other platforms, as well as related firms using blockchain technology. The association plans to focus on four “spheres of activity” within the ICO space.
1. Creation of reporting guidelines for ICO projects. This will include KYC for project leaders, identification standards and background checks. Partnerships with leading law firms and counsels will be valuable here. Association will be working with the ICO Governance Foundation to ensure compliance with IGF-1, the global self-regulatory disclosure protocol.
2. KYC/AML guidelines for ICO investors. These will include identification standards, blacklisting checks, cooperation with the Financial Action Task Force on Money Laundering (FATF), and so on.
3. Business due diligence. Assessment of a project’s viability in terms of its business model. This will initially be carried out via a committee of experts, but will eventually be achieved through community voting run on blockchain mechanisms, creating a kind of a decentralised ratings agency.
4. Legal assessment. Lastly, it’s also necessary to provide legal perspectives regarding the issued tokens, classifying them as equity or utility tokens and monitoring the compliance of token sale procedures with local regulations depending on their categorisation.
It remains unclear if the project will receive much support from the ICO community, as many view regulations — even voluntary ones — as being the first step down a path towards red tape, government oversight, and innovation-killing rules. Thus far, the announcement has also been met with silence by existing government regulatory agencies, many of whom are seeking to establish their own rules for ICOs in their individual countries.
If all goes according to plan, the Waves-backed association will be registered and operating in Switzerland in early 2018.
