The blockchain space has moved so fast that it is quite difficult for legislators to make laws up to date and relevant.
The absence of such new cryptocurrency ICO related regulations does not mean that ICOs and blockchain startups are exempt from regulation. It is far from that. Any team that decides to promote a new cryptocurrency ICO must be careful and adhere to the laws to prevent any legal issues that may arise.
This article contains a series of factors that must be understood before launching an ICO or project. They will involve seeking counseling and advice from experts who are in the best position to define the issues.
One common practice when running an ICO is separating the main entity from the issuer company. This act is done for different reasons. Some include choosing distinct business entities and separating legal liability. For instance, trusts and foundations are commonly used for ICO launches but aren’t the best option for business operation.
Securities and commodities laws
Despite the large number of laws to consider, the most important concern for many projects is whether the token can be categorized as securities.
There are several organizations in the Blockchain space that help clarify such issues in different jurisdictions on such uncertainties. One organization in the trade is Coin Center. This non-profit organization works on policy issues that affect cryptocurrencies. The organization also has a framework for regulation of securities along with a law framework for Blockchain tokens.
KYC and AML laws
In all legal jurisdictions, you will be required to follow the financial surveillance laws.
In almost every legal jurisdiction, no matter what the legal definition of cryptocurrency is, you will usually be required to abide the financial surveillance laws. They are known as the Anti-Money Laundering and Know Your Customer rules.
These laws mandate all financial institutions to collect and retain all information about clients and share the information with the regulatory bodies.
You must also abide by crowdfunding laws and taxation laws.