From Singapore to the UK,
Cryptocurrency regulations have been gathering momentum worldwide. But many countries still don’t have firm policies in place. Even so, blockchain business development continues to outpace the regulatory progress, often leaving blockchain startups in a dangerous gray area that may come back to haunt them.
Two of the major areas of concern surrounding crypto regulations are exchanges and ICOs.
Home to some of the most horrific crypto hacks, exchanges have suffered tremendously from the lack of regulations. Additionally, their target market is largely made up of new and inexperienced traders adding to the risk involved. The user base is also very broad and scaling fast since the market is global and 24/7. The sufferers of exchange hacks include the exchanges, the industry itself, and most especially, the users. These crypto holders often have no recourse when a hack occurs in an unregulated exchange. But some companies are creating SAFU funds, as CZ Binance termed it, meaning a Secure Asset Fund for users. These ’emergency funds’ are designed to protect user assets in the event of a breach. But many exchanges do not have these funds in place, and there are no regulations at this time requiring it.
In most countries, regulation efforts have focused mainly on ICOs. While it may seem like this is in the interest of protecting investors, some might say that it is control and cryptocurrency tax concerns that are the driving forces behind ICO regulation.
The backlash against ICOs has brought to light the ‘scam ICO’, while heralding in new fundraising mechanisms for tech startups, like the TGE, STO, and TDE (token generation event, security token offering, token distribution event). But without regulation, raising crypto capital by any of these means will still slow down blockchain companies who are trying to develop their crypto projects. Recent SEC actions have made that painfully clear.
Where Self Regulation Comes In
While federal regulators are working on ironing things out, self-regulation opportunities are cropping up to support these startups. This is good because:
- It gives blockchain businesses another choice. Now they don’t have to wait for full regulations to take effect. Nor do they have to worry as much about proceeding without formal regulations. In essence, they playing things as safe as possible and being proactive in self regulating.
- The self-regulation movement is more aligned with decentralization and is poised for a greater level of acceptance amongst the crypto community. Self sovereignty, financial freedom, financial inclusion are all themes that provide a basis for self regulation in establishing new sets of rules around compliance.
“Restrictive and exclusionary banking and financial regulations no doubt played a role in the drive to create cryptocurrency to begin with, so there’s no surprise that the industry is resistant to regulations as a whole.” – Darya Karatkevich
Self Regulatory Progress Across Multiple Blockchain Companies
Across the globe, self regulation comes in many different forms. But all groups involved share the same vision: to help crypto-based startups navigate the fast-growing blockchain industry.
In the next section, we’ll cover four different regions of the world. By taking a look at the self-regulatory projects they each have going, we can gain some insight into how self-regulation is fitting into the future of crypto.
United Kingdom – Eqwity.io
- Equity Airdropping
- Proof of Viability
- Bidirectional Trust
They’re also developing off chain capabilities so that a startup can initiate both a utility token and a security token. Their “1 investor 1 vote” mechanism speaks to their vision of a sustainable, transparent process infused with trust and fairness.
Japan – Lastroots.co
Japan’s self-regulatory body, the Japan Virtual Currency Exchange Association (JVCEA), was approved by the government in October 2018. Since then, they’ve had five Japanese exchanges join their association. Three of them may continue operations while their license applications are in process. One of these blockchain companies is Lastroots Inc.
All Japanese crypto exchanges and startups issuing a token or coin will be required to register with the
To learn more, you can read the Lastroots Inc. white paper, or watch their explanatory video below:
Singapore (Startups TBD)
Singapore’s Token Economy Association (TEA) is introducing an accelerator for blockchain companies in the region. Sponsored by proponents of the crypto industry, this self-regulatory organization was created to provide a layer of oversight on digital assets. The key focus is on protecting consumers while advancing the integrity of crypto markets.
By partnering with Tribe Accelerator, TEA is creating a FinTech Fundamentals Program. Additionally, they’re launching a Blockchain Beginner program. Ultimately, startups involved in the accelerator will compete in TEA’s sponsored hack-a-thon. For the entire duration of the program, startups receive support, resources, and access to mentors.
Projects that stand out in the hackathon will have a chance to move on to the Tribe Accelerator. It may not seem to be strictly self-regulation. Yet the process of steering FinTech startups to sustainable business practices bodes well for the industry. Additionally, it represents a great example for those seeking to embrace self-regulation.
“Tribe Accelerator is focused on grooming the next generation of start-ups, and partnering with TEA Singapore will provide us with another channel to ensure that we continue to empower young entrepreneurs through education, networking
Philippines – 19 Startups
The Philippines has its own FinTech City, the Cagayan Economic Zone, which was the first economic zone in the Philippines to host FinTech startups. The Zone’s regulatory authority, CEZA, has recently created and approved guidelines for digital assets for self-regulation purposes. These regulations on Digital Asset Token Offerings (DATOs) will cover the acquisition of both utility and security tokens.
The self-regulatory organization (SRO) behind CEZA’s new framework is the Asia Blockchain and Crypto Association (ABACA), which will assist blockchain companies with compliance. ABACA will be helping these startups with guidance while converting industry participants into enforcers.
Amidst all the talk of government crackdowns and constrictive crypto regulations, it certainly is heartening to see so many accomplishments on the self-regulation front. Industry experts and government officials are coming together and figuring out a somewhat decentralized way of keeping investors safe. These efforts will be a welcome addition to the burgeoning blockchain for business landscape.
The beauty of decentralized startups, like those blockchain companies mentioned above, is that they have the ability to self regulate designed right into the technologies they use.
Another great example of this would be our tokenized app, which uses blockchain technology, smart contracts and oracles to create a social trading platform that automates accountability. Participants on the HedgeTrade platform are incentivized to act in ways that support the entire ecosystem. Welcome to the cryptocurrency industry!