Forming the legal basis of ICO's

[teddyelwyn]

Been very interested in the polymath ico as of late. Atm they're keeping things in stealth mode before they announce their ico (if they even decide to go public or not). Here's an interesting article about legalities of ICO's:

"The increasing popularity of ICOs and token sales has led to a heightened awareness of Anti-Money Laundering and Know Your Customer requirements on blockchain networks.

Last week we covered the statements made by the S.E.C. which encouraged capital raising, but also warned investors to do their own due diligence before allocating funds in an ICO.

Earlier this year, the S.E.C. concluded in a report that a token sale for The DAO (short for ‘Decentralized Autonomous Organization’) represented a security offering and was subject to regulatory control.

The Ontario Securities Commission issued in August a notice,“Cryptocurrency Offerings,” outlining how securities laws may apply to token sales. The regulatory body, which oversees Canada’s largest province, also hosted a hackathon where startups were invited to innovate regulatory solutions for blockchain.

Greg Medcraft, Australian Securities and Investment Commission Chairman, called ICOs “a very interesting concept”. He went on to reiterate Australia’s supportive stance on blockchain technology and token fundraising:

“An ICO is not equity — you’re offering basically something that is the product of the entity that is doing the launch. You’re taking a bet on getting that product early. How different is that if I go to Kickstarter and I buy something — a watch — and then I get that watch and sell it in the future…”

On the opposite end of the spectrum, China has banned ICOs, but our sources tell us companies and investors are operating on a ‘business as usual’ basis.

KYC Exists to an Extent in Current ICOs
Many ICOs have already adopted general KYC procedures that are designed to vet token purchasers and investors. Polymath wants to take this one step further.

While KYC alone may be enough for some utility token sales, it is only one of several requirements that Financial Securities Regulators are expecting from security token sales. Polymath will be a one-stop shop for the launching and issuance of securities tokens”

The core of the Polymath network manages the interaction between participants in what we have termed a ‘Security Token Offering’ or ‘STO’.

Security tokens issued based on the Polymath Network are restricted to only KYC verified users. Polymath also innovates beyond the initial offering phase. Contrary to the popular blockchain model of today that sees tokens freely tradable after primary issuance, tokens issued with the Polymath standard maintain the trading restrictions for the secondary market, as well.

When issuers restrict a token from unverified addresses, decentralized exchanges are able to conduct trades with authorized participants. Issuers can rest easy knowing their tokens are held only by authorized investors, and not by those who do not meet the specified investment criteria.

Polymath Aims to Fundamentally Change the Securities Market
By reducing the need for centralized exchanges due to self-regulating securities tokens, our platform helps guide the financial realm towards decentralized secondary markets. It’s a world of negligible fees, instant settlement times and around-the-clock trading.

Polymath is powered by one billion ERC20 Polymath tokens, (POLY), the underlying economic driver of the Polymath network. In the same way as Ethereum successfully created its network effect, POLY incentivizes participants in the Polymath network."

Website: https://polymath.network/

Whitepaper: https://drive.google.com/file/d/0B2pD5w-G5-sJVGc5YjdmZ0hsYVE/view




Article: https://blog.polymath.network/this-blockchain-app-can-help-to-form-the-legal-basis-of-icos-f22afb8f22bb

[salterious]

I too am bullish on Polymath coming out hopefully they do an ICO round but if they don't I think they will still be one of the better coins coming out in 2018. They are complying fully and other than that the idea of being a security token platform is simply revolutionary. We know those who dare to do something new and succeed get rewarded well we will see if that is Polymath soon.

[teddyelwyn]

I too am bullish on Polymath coming out hopefully they do an ICO round but if they don't I think they will still be one of the better coins coming out in 2018. They are complying fully and other than that the idea of being a security token platform is simply revolutionary. We know those who dare to do something new and succeed get rewarded well we will see if that is Polymath soon.

YES!! Couldn't agree more. Seems like not a lot of people have heard about them, but those that have are very behind them. I think what they're doing is revolutionary and can change securities as a whole. Hopefully they do that public sale. I have a feeling they just might. But we'll see. I'll be sure to post whatever updates I see. 

[jack107]

really psyched about polymath. I wonder why they're holding out on us tho....legalities? probably. Anyone have an idea of when their sale is??

[alexcopper]

IMO polymath will be huge not in terms of their coin, but the concept alone. The fact that they signed deals with firms is a big step for crypto. I give them a lot of credit for being the builder of this sphere. I have high hopes for polymath as a supporter.

[akeegan]

regardless polymath is a great project. private or public sale it doesnt matter because once they hit exchanges or launch their platform, we'll have access. I don't think they even need an ico with the demand they have. as far as updates, you guys should join their telegram group for updates: https://t.me/polymathnetwork

[cdb1690]

When issuers restrict a token from unverified addresses, decentralized exchanges are able to conduct trades with authorized participants. Issuers can rest easy knowing their tokens are held only by authorized investors, and not by those who do not meet the specified investment criteria.

I can see the practical utility of this approach, but it goes against everything cryptocurrencies should stand for at least in my opinion as it makes the transfer of value extremely centralized (this is much more centralized than cash for example). So, it's a pass for me, purely for philosophical and idealistic reasons.

[jdarren]

When issuers restrict a token from unverified addresses, decentralized exchanges are able to conduct trades with authorized participants. Issuers can rest easy knowing their tokens are held only by authorized investors, and not by those who do not meet the specified investment criteria.

I can see the practical utility of this approach, but it goes against everything cryptocurrencies should stand for at least in my opinion as it makes the transfer of value extremely centralized (this is much more centralized than cash for example). So, it's a pass for me, purely for philosophical and idealistic reasons.

I think when it comes to securities, there has to be a middleman of sorts just like how there's exchanges or buying crypto. What I do find very beneficial is that they'll be connecting startups to investors. I think this is the right move to getting the stock market running on blockchain.

[zhukovt34]

ICO should be build in that way that project team would have to give some credentials and be in some way of obligation to there customer in giving real value down the road.ICO-s that are clearly money gethering for private welth, must be some legal punishment for them and customer return policy.

[svojoe]

It seems to me that this is has no sense. Now it is impossible to control ICO just because they are based on the crypto and the most countries don't have even laws to control crypto.

[cdb1690]

It seems to me that this is has no sense. Now it is impossible to control ICO just because they are based on the crypto and the most countries don't have even laws to control crypto.

It is possible. You have to differentiate between native blockchain assets such as Ethereum and smart contract assets such as ERC-20 tokens. While rules for tracking and transferring native blockchain assets are defined at a protocol level, rules for tracking and transferring smart contract assets are defined in smart contract itself. Smart contracts can include any arbitrary logic. It's very easy to build a smart contract, where a designated owner has to to whitelist an address before it is able to receive any tokens created by that smart contract.

[Coin12]

It seems to me that this is has no sense. Now it is impossible to control ICO just because they are based on the crypto and the most countries don't have even laws to control crypto.

Yes, i agree also this is impossible for now since most country has no law how to control.
But next if there is one country forming a legal ico andd they can be starter to the other country to follow.

[speakoo]

It seems to me that this is has no sense. Now it is impossible to control ICO just because they are based on the crypto and the most countries don't have even laws to control crypto.

I agree with you man , no one could control icos , you can not control this from personal , only the governments can .

[cdb1690]

And more thing: it's important to differentiate between legislation and technology. Laws are one thing, what is technologically possible is another thing. So even though countries might pass laws that are trying to regulate transfers of value in Bitcoin protocol, whose laws would be totally unenforceable as it is not technologically possible for any third party to control or regulate Bitcoin transactions. This is because Bitcoin was intentionally designed to break such laws and make them unenforceable. But, it is also very easy to design another protocol or smart contract, where such regulations would be possible to enforce, Polymath being one example.

[bornforfreedom]

Great points made everyone. I had the chance to look at the project you brought up. It looks like they're paving the way to the happy place between blockchain tech and regulation. While companies can launch their own security tokens, it has to be reviewed for legalities along with the network of investors need to be verified. This is interesting because it becomes like the stock market on blockchain which is crazy to me. Never thought that this day would come.

Thanks for sharing the good read and this project. Planning on going in. I see a big future for securities and tokenized assets in the upcoming year.

[Btc4Proxies]

not sure if polymath is doing an ico since they don't really need one. either way i hope they get listed on exchanges so i can be a part of this movement.

if anyone is a part of their telegram group, you'll see that they've grown thousands of followers these past few weeks and they're doing an airdrop very soon. https://t.me/polymathnetwork

[Ccexicocartel]

Honestly it's hard to control ico's but it is easy to follow guidelines that governments put out. I think Polymath is a good bridge between governments and the crypto industry. They also push the boundaries for mass adoption which is great for the finance sector.