The European Union is rising as a significant alternative to the United States as far as Initial Coin Offering (ICO) projects are concerned after France passed what looks like the most progressive legislation this space has ever seen.
That may now well make Paris, the main capital in the driving seat of EU alongside Berlin, a very appealing destination for crypto entrepreneurs who like being welcomed and even respected by regulators.
Alongside the niceties, they will enjoy a guaranteed bank account after complying with what are expected to be highly reasonable optional licensing requirements.
Even more than that, they will get access to institutional investors, such as hedge funds, pension funds, asset managers, who’ll be able to consider the licensed token as if it was a security for investment purposes.
A world first for a regulator here may well be the fact that the license is not required. One can still ICO, with the license being optional, but the extra benefits it provides would probably make it very desirable.
This is in stark contrast to America where ICOs have to comply with century old laws that in many ways make the ICO not very viable from a business model perspective.
To say nothing of the fact that an innovative US start-up that wants to raise say $10 million has to comply with the same library of laws as a corporation which wants to raise billions.
France, and by association the EU, is now providing an alternative to the highly criticized US framework, with the timing as if calculated to provide SEC with jurisdictional competition.
Is an exodus thus to be expected, a go to Europe young man refrain? We do not know, but the chances are real because SEC has been angering for some time both Silicon Valley and Wall Street.
Here is for example what Nancy Wojtas, a former Counsel to SEC’s Chairman of the Commission who now seems to be assisting some crypto entrepreneurs and VCs, recently said:
“What we have is, for example with SEC, they come in with a little box and say, ok, here is our box of regulations, you have to fit in it. And we’re going, well, no, we’re kind of, really, outside the box. No, no, no, no, this is our box, you tell us how you fit in it. And they don’t have answers at this point…
We keep working at it, we need a solution. Either we keep innovation in the US or we move it off-shore.”
Some has been moved to Estonia and Switzerland, which also have a friendly regulatory environment, with London remaining a destination of choice for many, but France is now putting forth a serious bid and it may well have the same effect for Paris as London’s bid in 2014 following New York’s Bitlicense debacle.
The then Prime Minister David Cameron grabbed the opportunity and very much run with it. George Osborn, the then Chancellor, became the highest official to own and buy a small amount of bitcoin.
The British Financial Conduct Authority (FCA) then came forward with a number of very friendly proposals and even declared a beautiful friendship between cryptos and the regulator.
It then all culminated with London becoming the Financial Capital of the world and the Fintech Capital, but Brexit sort of sent things off-course as far as keeping up-to-date with developments in the crypto space.
David Cameron resigned, and with him/his team, it seems the focus of the civil service may have changed as it did not take a leadership role on ICOs.
London still has a very friendly regulatory framework, however, with sandboxes and so on, but Paris is going further than anyone has with guaranteeing bank accounts and opening access to institutional investors.
The one downside there is that they don’t speak english, as an official language in any event because plenty of French men and women most probably do speak english. The French regulator, moreover, AMF, also has an english version of its website, so language is unlikely to be much of a barrier.
With the biggest takeaway here being that this space may now well have an ally in the world’s almost biggest economic block which currently is about the same as the US economy in combined GDP.
That jurisdictional competition now at least offers a choice to crypto entrepreneurs who can just tell SEC they’re taking their business somewhere else.
To Europe in particular, which somewhat surprisingly is now becoming the most forward looking and the most innovative jurisdiction as it keeps racing the United States to take the title of the world’s biggest economy.
With cryptos, blockchain tech, and ICOs as the pioneers in that aim to return economic optimism and perhaps an economic boom as the roaring 20s maybe rhymes again.