Bitcoin Forum

With the massive rise of ICOs over the last few months, some of which have been straight up scams and ponzi schemes, will this expedite the entrance of governments into the world of crypto in the name of consumer protection?

I've only been active in crypto for a couple months, but I've been watching the market for a couple years. The ICO's will eventually draw the governments in for the sake of consumer protection. The problem will lie in actually being able to control them. Short of blacklisting the websites there isn't much they can do about it, let alone track if you've been involved in the ICO. Even if the sites were blacklisted somehow there's always a VPN service willing to get around it.

In the end, this is a wholly uncontrolled area, and probably will be for years to come. If you are U.S. based you're already not supposed to be active in the ICO's, so on a technicality regulators can't do much.

If indeed with the many ICO scams, I think the government needs to protect its citizens, but with impartial regulations..

Many governments don't give a shit about protecting their citizens from scam. All ICOs will move to these jurisdictions.

I don't think so, That they are going to take an interest in it.
They don't care about it and why people are so dumb to know that the ICO is scam or not why they don't do any research on that before investing their money in the ICO?

How do you even know an ICO is a scam. There are some ICO's with a good team behind them with good promise and strong community support yet somehow that might be a scam. It feels almost impossible to tell what is legit and not.

Agreed. It's difficult to know what is real and what is not, even after doing extensive research.

What you see in traditional stock markets is that there is a governing body that will hold companies and individuals accountable should they attempt to defraud or mislead people. However, in the crypto market no such governance structure exists yet. I do think that such an organisation will eventually emerge, and it doesn't necessarily need to be enforced by governments or regulations. There are many other ways to motivate people besides forcing them by use laws.

I think scam ICOs won't draw the attention of governments because there is no incentive for them. Perhaps if they find a way to regulate and get a profit from ICOs then maybe they will pay attention to scams.

I hope so. That is why the government wants to regulate this cryptocurrency. In my opinion its better to have a body that will monitor this ICO's. They will check the infrastructure, actual project profitability etc. We are not spending here play money, but a bitcoin that has real value to fiat.

I think it really depends how big the ICOs are. Coins like Leocoin which scammed lots of people were investigated and arrests are made. But, for now looks like there are too many to regulate.

It may take lots of time because government still evaluating cryptocurrency highly recommended bitcoin also under investigation for legalisation then next will be altcoins and it will take years to evaluate ICO like crypto assets.

Dont think anyone can ever stop it

As mentioned, the main reason why crypto exist - decentralised

Which means no one can ever control, made decision, or change something without the majority agree

Govern will never ever get to shut down cryptos, even if they banned, how can they prevent these?

Blocking Major IP from accessing cryptos wallet/site?
Tor/ Vpn is the key

most of these people are identifiable so they can stop them. they don't even need to pass or enforce any laws, just remind them who's boss and they shut themselves down.

the bucks are too big and too reckless to go unnoticed. it's coming.

It'll definitely happen. Sooner than later is my guess, about the time some US Congress person's kid gets taken for a lot of money from an ICO. Then we'll get 24/7 news blasted about how dangerous the crypto space is and they'll be a couple Congressional committees to study the issue with the foregone conclusion that gov't needs to insert themselves somehow as the middleman. Those middle men will be the usual suspects from big banks and hedge funds who while supposedly performing oversight will figure out a way to enrich themselves. They will tithe the proper amounts to their favorite politicians so they themselves never have to suffer "oversight". Or it could all be candy corn and rainbows and there are no lessons to learn from history because "cryptos are so like revolutionary man", lol.

The United States Government fired a shot across the bow well over four years ago over this. https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf (https://www.fincen.gov/sites/default/files/shared/FIN-2013-G001.pdf) How many ICOs, scam or not, meet the definition of de-centralized virtual currency? Zero. One needs an "Administrator" and "centralized depository" in order deal with the proceeds from the ICO. How many have registered with FinCEN as MSBs? To my knowledge one, Ripple. This was part of the settlement with FinCEN. https://www.fincen.gov/news/news-releases/fincen-fines-ripple-labs-inc-first-civil-enforcement-action-against-virtual (https://www.fincen.gov/news/news-releases/fincen-fines-ripple-labs-inc-first-civil-enforcement-action-against-virtual)

There is no need for the US Congress to act here. The United States Government can use existing law and has a four year old guidance, and a civil enforcement action in place already.

No, they will not act in any way, it would be way too hard. Even in proven scams using credit cards, reversable, trackable, they do nothing, and when they do, they take that much time that even a legless guy would have the time to world turn at feet.

The government won't got involved until they figure out how to get the money for themselves.  Until then, people will have to be more careful, too many scammers. 

i think not, even bitcoin can't draw the attention of government because bitcoin is not regulated yet and that is same with altcoin. so for ICO we must know the risk and take the decision. it will be different from Ponzi because that kind investment only steal our money and not give profit. so just avoid it

Dont you guys think that introduction of specific regulations in the altcoin domain can become quite a reality for countries with generally authoritarian stance - Russia, China, some Latam states maybe?

Government must not do everything for us, are we children? We need less government in our lives. The purpose of government have been abused by crooks. This forum is not supervised nor run by government yet it's functioning very well. I'd rather have software and robots run things than so called government.
Crypto is about to take over the World yet it's is not regulated by government but by softwares and smart stakeholders

it's not the matter whether the Government should be at the driver's seat but rather how far the long arm of law could reach as regards misuse of cryptocurrencies
and enforcement of ICO-related obligations.

you may feel that way.

they don't. they're here to justify their salaries and protect their position. they'll destroy anyone and anything who gets in the way of that. with that reasoning it's inevitable that they're gonna come down heavy soon.

I agree with the previous posts about governments not being able to stop cryptocurrencies, but they can definitely make them harder to use in certain countries.

In the US, the SEC is making noise about regulating ICO's at some point: https://news.bitcoin.com/sec-eyes-initial-coin-offerings-for-regulatory-oversight/

Already more than one Altcoin company has said they won't offer coins to US citizens during the initial sale, because the legal implications aren't clear. For example: https://www.bitquence.com/global-remittance-and-transactions/bitquence-token-sale-not-available-in-the-u-s/

It will just take one really high-profile ICO scam to get the US regulatory authorities to act more strongly.

I think it was the SEC that came out and said that we need to be self-regulating; the best way to do that and grow the entire ecosystem is for sale participants to be choosy with their funding to projects with real potential from accountable individuals. 

I've seen a lot of ICOs where the team members are based abroad and details are very difficult to verify -- and then inevitably vanish after the ICO completes.  That these continue to get funded is, I feel, an injustice to later legitimate projects.  I spend at least an hour doing research before taking part in any token sale, several hours on some, and in legitimate project there's always plenty to read and learn.

My opinion is that the primary way of validation should be similar to how VCs operate: the quality of the team behind the project, and how their background pertains to the kind of project they want to do.  Prior work experience, contacts in the industry, etc., are all important.  Amibitious projects, in my mind, are not something we should shy away from, as the next big thing can often be easily doubted at the beginning, and even the most successful businesses morph and change from humble beginnings.

https://news.bitcoin.com/russian-bankers-push-to-legalize-cryptocurrency/   something is as well stirring up in Russia though I doubt that "legalize" will mitigate the risk rather than multiply it

as a follow up, another news piece worth paying attention to:
http://www.iflr.com/Article/3721543/Asian-regulators-differ-on-framework-for-bitcoin-operators.html  So, Japan is already creating regulatory hurdles for digital asset traders

I am sure that the government will take some measures to counter these activities because of the amount of money they are able to raise within a short period of time and the loss people are encountering if it is a scam,is it possible for them to counter it,i am not sure about that.

I wonder how exactly the state will hold accountable the people behind the scam scheme - personally or in the name of the legal entity and whether reimbursement could be legally imposed before the asset dilutes. Otherwise what's the sense of even initiating such talks on a state level?...

The problem is that the ICOs are always modelled such that the investment is actually a donation and that makes it harder for the government to intervene even if they wanted to. Case in point you can find plenty of scams on kickstarter or gofundme as well but these sites are still operating and directly in fiat.

I don't think the government will involve itself unless there is a clear cut case of a known person intentionally misleading people and running off.

Yeah, but the United States does.  We're full up with regulations that aim to protect us from every little thing. So it is indeed surprising that there seems to be nothing about altcoins or cryptocurrency scam stuff in general.  I get that the government isn't your parent, but they certainly know how to regulate things to the nth degree.  Somehow I think we're due for some regulation, but I'm not hoping for it.

Look at how the US gov't regulates markets.  They won't even allow banks to fail organically, or even some hedge funds.  They do all sorts of crap like that but they're dead silent about crypto.  Kind of makes you think...

that's the problem there's no strong evidence that those investors can bring their case into any government bodies as they are not oblige joining but its their own decision risking their money thinking that it will rise up its really a gamble and we don't need the interference of the government with our mistake we should be more furious and researchful before we make our moves.

Americans are technically not allowed to contribute. Plus USA is not the only country on the planet. I guess there will be some pushback at some point. I don't see what governments could do.

and what do you think about usage of altcoins in business-to-state relations, such as public procurement etc?

perhaps offtopic but IMF is definitely turning the eyes on cross-border transactions in crypto:

http://www.coindesk.com/imf-explores-icos-central-bank-coins-new-blockchain-note/

Agreed. Unless there is blatant fraud (and a clear cut case like you said) I don't see the them investing time and money into pursuing it. There is such minimal legal precedent when it comes to anything crypto that I can imagine that as a prosecutor it's almost impossible to predict how a court would rule if the case is as ambiguous as most ICOs.

we are speaking of common law countries?

They already did, don't worry about this. And scam icos will cause lots of problems for ico contributors as well.

Government might already have knowledge on it since its money related and they can benefit from it, they might only studying now and soon they make actions, icos were really prone to scam like pyramiding and making duplicate sites of potential successful ico, we need to be careful.

I think because the government hasn't​ decided that crypto currencies is legal or not, so the government won't take any action yet, the government now still in supervised and review about crypto currencies,but I do believe one day it could be the reason for the government to make a regulation about it or even banned crypto currencies

Government wont really bother at all that they would able to protect its citizens when they are being scammed by those scam ICO's out there since government doesnt really care about when it comes to cryptocurrency crowdfunding and they will surely think off that its your responsibility since its your choice to join those then you should really face consequences when things go wrong.

I think if those ico are going to use fiat currencies as an option of payment for their ico i think thats the only time when they will draw attention from government specially if they have collected a huge amount of money,

Actually there is no need for extra attention, if anything is wrong, it is sure that it will be prosecuted ultimately and those who are scammer will found themselves in danger.

Good point. Perhaps if some ICOs accept  fiat the government will have a better understanding of how to go after them considering the legality around crypto is so ambiguous.

For the Governments to establish a law that will control cryptocurrency they most have a concrete reason to protect consumers, limit the activities of terrorists, fighting scamming activities and criminality. Scamming who are claiming to be an owners of ICO and published their coins here for investment provide the best reason for governments regulatory agency to flash they touch lights into activities of cryptocurrency with the aim to control and regulates it. The way people are loses millions of dollars values into the pocket of this evil scammers is alarm and something urgent need to be done to stop this madness. Op thank you for bringing this topic.

I didn't see any news that scam ICOs ever were punished by the low. Maybe I skipped something? Tell me if government paid attention on this actulal grabbing of peple and used the necessary punishment. I think such ICOs will just blow if necessary moves will not be provided.

I think with the emergence of ico scams, which we declare need to get legal protection be it consumers or companies that are doing ico, now there are many events that benefit ico services.

Which government? The UN?

Yes its true. Unless bitcoin is legal in a country, it's centralized and government have benefited to this, they will protect the people from scam. But the mere fact that bitcoin ia decentralized so they will not give a shot on this matter.

The SEC issued an investor fraud alert for crypto coins.
IRS & REV-CAN Tax laws were made official.
Ripple was fined by FiNCEN.
Guys buying BTC with LocalBitcoins were arrested by the FBI.
Coinbase has an ongoing lawsuit with the IRS.
Cryptsy had a class action lawsuit succeed in getting money.
Poloniex takes users ID to remain AML/KYC compliant.
Gavin Anderson met with the CIA.
Spoetnik gave Bob Barker a hand job back stage to get on the Price is Right.

..guess which one of those things is not true ;D

"draw"?
Uhmm that boat sailed.. It's called the crypto-titanic.. Full steam ahead investards!
Can't talk.. Too busy posting opinions on Bitcointalk!

Maybe talk to Artem about how Coinbase rated him out.
Or Cryptsy staffer BitJohn about how they would lie to customers about network problems then freeze their money and then hand over their info to Fed's.

Don't mind my FUD NOOBS just keep posting.. YOU KNOW THINGS!