In an effort to lure more FinTechs its way, France is working on a regulatory framework that would enable startups to raise funding via cryptocurrencies.
Economy minister Bruno Le Maire wrote in an article for Numerama, a French website which was covered by the Financial Times, explaining that Paris is aiming to introduce legislation that lets companies launch initial coin offerings and get a formal stamp of approval. That is aimed at protecting investors from ICOs that ultimately have no value.
The idea is to make France a global hub for ICOs, Le Maire wrote in the letter, noting it would make the cryptocurrency market — and as a result, ICOs — more legitimate. That would be welcome, given that cryptocurrency is a market that is unregulated and prone to wild swings in prices. “France has every interest in becoming the first major financial centre to propose an ad hoc legislative framework that will allow companies initiating an ICO to demonstrate their seriousness to potential investors,” Le Maire wrote.
“Blockchain will offer new opportunities to our start-ups,” he added, referencing the technology underpinning cryptocurrencies and the ICO process. We won’t miss out on the blockchain revolution!”
ICOs were hugely popular last year as the price of bitcoin, the leading cryptocurrency, soared. According to the Financial Times there were more than 200 digital tokens unveiled in 2017, with ICOs raising close to $3.9 billion around the globe. In 2018 there has been $4.5 billion raised from 128 new ICOs, reported the Financial Times, citing CoinSchedule, the website that tracks ICOs. Despite all that, fundraising regulators around the world have warned investors that many of the ICOs are fraudulent and aren't linked to a new project — rather, the money is being used for money laundering or other nefarious activities. Moreover, many fail to produce the product or service they were aiming to make with the ICO proceeds. China and South Korea have taken the step to ban ICOs altogether. On the flip side, countries like Switzerland, the Cayman Islands and Gibraltar have embraced cryptocurrency and have created their own regulations to lure the startups to their countries.