On September 7, 2017, the Crypto Valley Association (CVA), the Swiss nonprofit organization supporting the development of blockchain technology, revealed plans to develop an "ICO Code of Conduct" to help guide businesses engaged in funding via token offerings.
According to the CVA, the framework takes into account legal, moral, and security obligations, and is expected to inspire confidence in cryptocurrency investment. The CVA acknowledges an explosion of crowdfunding through token generation events, and while it fully supports innovation in blockchain technology, the CVA admits that "Token launches are largely unregulated, because the exact function and legal and tax status of such tokens is unclear." This puts unaware investors at risk, particularly if companies fail to disclose the potential dangers associated with the investments. In that vein, the association has assembled a group from various fields, including law, tax, accounting, cybersecurity, and communications, to draft a code of conduct.
Oliver Bussmann, President of the Crypto Valley Association, described the appeal of crowdfunding with cryptocurrencies. “With the explosion of innovation surrounding blockchain and cryptocurrency technologies, it is unsurprising that organizations are leveraging similarly innovative financial instruments to raise capital. Thanks to their simplicity and popularity, the number of token launches has increased rapidly in recent months, with over $1.6 billion USD raised in 2017 alone.”
“However, this growth in popularity has caught the attention of regulators worldwide, who wish to protect participants by clarifying the exact function and legal and tax status of the tokens. In addition, investors are often unaware of the true nature of their investment, and the documentation published to accompany token launches often minimizes or ignores the associated risk.”
The CVA hopes that its guidelines for token offerings along with supportive regulatory measures will provide some stability to what it calls "an exciting but uncertain trend in blockchain," and that this will help grow jobs and attract investors to Switzerland.
Bussmann concluded, “The rapid development of token launches has raised concerns around stability and security, and as a leader in this field, it’s our responsibility to support the industry. The widespread adoption of this framework, combined with careful supportive regulation would bring stability to an exciting but uncertain trend in blockchain.”