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Earlier this, France implemented the PACTE Law to provide regulatory frameworks for companies utilizing blockchain technology. When it comes to Initial Coin Offerings (ICOs), France established the ICO Visa as a means to regulate the new fundraising method. On December 19th, 2019, France’s financial regulator granted its first-ever ICO Visa. Are ICOs making a comeback?
Throughout the year, the French government has received a positive reputation regarding the integration of blockchain technology. Now, France has announced its first approved ICO following its newly established ‘ICO Visa’ under the PACTE Law. The approval comes from the country’s financial regulator, the Autorité des Marchés Financiers (AMF), regarding a company called French-ICO.
Earlier this year, Reuters reported that the AMF was in talks with several candidates regarding an ICO Visa. Now, at least one of those talks has come to fruition.
The company calls itself ‘the first fundraising platform for cryptocurrencies’ and leverages the Ethereum blockchain. It will offer tokens starting on March 1st 2020, with the ICO ending on three months later on June 1st, when the ICO’s approval expires due to the AMF’s limited subscription periods. Once the AMF approves an ICO, it will have a maximum six-month duration.
According to the AMF, only the company’s ICO has been approved — no endorsement for the actual token issuer is included. The French government previously implemented the PACTE law, which provides extended guidance and oversight on ICOs, requiring the government’s approval prior to launch.
Through the AMF’s framework, an ‘ICO visa’ can be granted, allowing for a public sale of utility tokens. The entity conducting the ICO must be registered in France.
As part of the process, ICO issuers are required to provide a document outlining all marketing materials regarding the ICO. They are also required to inform investors of the risks associated with investing in their ICO. The company must also demonstrate the capability to secure investor funds responsibly and follow strict Anti-Money Laundering (AML) procedures to prevent the misuse of funds from investors.
Any issuers who fail to comply with the legal requirements will be subject to heavy fines, according to the regulator. When it comes to traditional investments, AMF frameworks require investor reimbursement through compensation funds. This will not be extended to approved ICOs, however.
The primary benefit of receiving an ICO Visa is the legal ability to market and promote the offering to public investors. A company can still legally launch an ICO without registration with the AMF, but it will not be allowed to market or promote the sale.
ICOs saw massive hype over the past several years, being leveraged by hundreds of companies to raise billions of dollars in capital. Yet, even quicker as ICOs took off, they came to a crashing halt once regulators entered the scene.
In the United States for example, Securities and Exchange Commission (SEC) Chairman Jay Clayton says nearly every ICO he has seen, minus Ethereum, constitutes a securities offering. Yet no ICOs followed the country’s federal registration requirements that are embedded in such an offering.
Throughout the past year, the SEC has subsequently become increasingly active in the digital asset space, bringing a number of charges to ICOs conducted after the 2017 DAO Report. Companies include Block.One, Blockchain of Things, and even the popular Telegram.
As a result, companies looking raise funds via digital assets have left the ICO behind, and turned to the Security Token Offering (STO) as a viable alternative. The STO combines the blockchain with traditional financial securities and is classified as a regulated securities offering. In this sense, the STO features much of the regulatory clarity that ICOs lack — depending on the jurisdiction at least, thanks to France’s new ICO Visa.
What do you think about France’s AMF issuing its first ICO Visa? Will French entities successfully use the new visa to raise capital in France? We want to know what you think in the comments section below.
Image courtesy of Journal du Coin.