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Crypto Valley Association Issues Guidelines For Token Offerings




Today, the Crypto Valley Association made good on its plans and published guidelines related to crowdfunding and member conduct.

On January 9, 2018, the Crypto Valley Association (CVA), a Zug, Switzerland-based nonprofit collaborative effort with as many as 550 corporate and individual members, released official guidelines detailing a crowdfunding code of conduct for token offerings.

The CVA's president, Oliver Bussmann, previously asserted that the rapid popularity of cryptocurrencies and blockchain technology have the attention of regulators on a global scale, and that the association would develop guidelines to help create a legitimizing structure for token offerings. He said, "With the explosion of innovation surrounding blockchain and cryptocurrency technologies, it is unsurprising that organizations are leveraging similarly innovative financial instruments to raise capital." 

Per Crypto Valley's site, "The CVA Policy Framework includes a set of Core Values, a General Code of Conduct (CoC) and a CoC for the creation of Decentralized Ecosystems (DECoC)." These include guidance for the crowdfunding initiatives of groups delving into the cryptocurrency space, while taking into account factors of legality, ethics, and security.

One key recommendation is that entities attempting to establish crowdfunding campaigns maintain absolute transparency. Companies should have public resources that clearly indicate the intended use of funds, explain token functionality, and assess the risk factors associated with investment as well as the technology. Enterprises are advised to avoid technical jargon when explaining protocols to possible investors; complex facets of operation or utility should be broken down in ways that are easily understood by those lacking technical backgrounds.

The Policy and Regulatory Working Group of the CVA worked with a panel of experts to develop the draft for the ICO Code of Conduct. The group's chair, Luka Müller, said:

"The growth in popularity of decentralised applications and ecosystems, often launched as so-called ICOs, has caught the attention of regulators worldwide who want to be technology friendly, but also wish to understand the risks associated with the issuing, selling and transferring of tokens by clarifying their function, as well as their legal and tax status. In addition, because of the rise in popularity of ICOs, new categories of contributors participate who 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."

As an organization with government support, the CVA's regulatory guidelines may gain steam if credence-lending officials make a legislative push. Such a framework might usher more crowdfunding activity into Zug valley, which is already the epicenter for something of a blockchain renaissance.

Bussmann reflected on CVA's commitment to providing a sense of clarity to token offerings:

"The Crypto Valley Association fully supports innovation in the blockchain space. We believe that token sales represent an exciting, sound and innovative approach to raising investment capital. Therefore, we believe Switzerland should support this trend by developing clear, comprehensible, yet flexible regulation that clarifies the legal status of ICOs and the tokens generated." 

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." 

Jeremy Nation

Jeremy Nation is a writer living in Los Angeles with interests in technology, human rights, and cuisine.

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