In the back drop of massive losses by investors in Initial Coin Offering (ICO) exit scams, the European Parliament's Committee on Economic and Monetary Affairs has called for the creation of strict regulations relating to ICOs.

Source: https://upload.wikimedia.org.

While there have been many ICOs which have rewarded investors handsomely, there is no denying the fact that some of these cryptocurrency based fundraisers have taken investors for a ride. A report by Diar, a blockchain intelligence outfit, indicates that crypto investors have lost $100 million as at 13/08/2018.
The biggest exit scam was pulled off by Shenzhen Puyin Blockchain Group in China. The failed startup raised a massive $60 million from its three ICOs. Chinese regulators have since banned ICOs and cryptocurrencies in the country.

Now, Members of the European Parliament have presented their opinions and comments on regulating and legalizing token issuance platforms and businesses in the EU.

The proposal has three main components in it:

1. It provides a solution for the fraud ridden ICO market.
2. It specifies a framework for competent and deserving ICO platforms and enterpreneurs to prove their legitimacy to the government.
3. It provides a regulatory framework which has to be complied with.

Source: https://siamblockchain.com.

While the proposed law may not provide a water-tight solution for regulating the ICO market, it is a step forward towards imposing standards and protection for this sector.

The regulations will only apply to ICOs raising less than 8 million euros. It is not yet clear what will happen to projects raising more than this amount. Speculation is that they will be subject to even tougher rules.

It is hoped that the proposed regulation will help to stem the tide of ICO exit scams and crypto linked frauds with the ultimate goal of protecting investors and consumers from further abuse and losses. Let's hope they achieve their aim.