Forbes: The ICO community analyzes and evaluates tokens from past regulatory attempts and sets standards


nnnIn order to avoid regulatory issues, to the center of the agreement company Protocol Labs joint AngelList initiated CoinList, tokens sales target limited to qualified investors. But also failed to avoid the criticism of experts, accused of unequal operation. So how does the ICO project be evaluated and that the relevant standards should be developed and discussed again. May be similar to the traditional capital market assessment criteria.n
nnTranslation: Annie_Xun
nICO take off at an alarming rate, and the current amount of money has been $ 2 billion, so that regulators catch up, so that a large number of speculators in the risk, many of them willing to pay to seize this tiny opportunity and let it develop.n
nAs a result of regulatory uncertainty, last month to the center of the Protocol Protocol Labs Association AngelList initiated CoinList, the platform to support tokens sales, sales object limited to qualified investors, and investors to provide SAFT (simple toll agreement, simple agreement tokens), the network can be exchanged after the tokens.n
nIronically, this super-compliance CoinList was sold for the first time (Filecoin raised $ 200 million an hour, raising the time to raise $ 250 million), but eventually by venture capitalists, The Token Economy author Stefano Bernardi “The Analysis Filecoin Does not Want You to Read” (Filecoin does not want you to read the analysis) in the worst terms of critical investment (his main judgment, to the early participation of friends and partners to provide better than other investors, their Financing beyond the advantages of determining the product market matching phase of the project).n
nRegardless of whether the Filecoin analysis is correct, this argument at least indicates that, like stocks, the token sales in line with the securities laws does not mean that it is a good investment; or even a good investment project, on behalf of the sales structure is not necessarily good. For this reason, some of the leading ICO investors’ business, professional projects and grassroots projects appear in the Reddit forum and Twitter. Most try to write financial knowledge to prevent investors from wasting money and prevent tokens from seeing people who are not Ayutthaya, while others use ambiguities to make ambiguous suggestions and even charge fees. It is clear that, regardless of whether the token is securities, an assessment of it requires a new set of skills, because they are fundamentally a technology.n
nJerry Brito, executive director of Coin Center, a chain-chain support organization, according to the traditional capital market analogy assessment and investment analysis, the traditional capital market in the government asked the issuer to disclose some information, “your investment advisers and analysts use this information and global information , According to subjective standards and market demand, so I think, now we see this community trying to let the issuer to disclose information, a similar rating.n
nA few weeks ago, ICO investors and issuers were not bothered by the Securities and Exchange Commission’s first encrypted asset report. Reference to the 1946 SEC’s case of W.J. Howey Co.’s case, the report summed up the DAO tokens is securities, and because it is the risk fund’s proxy shares, so it is not surprising. But the report says whether other tokens are securities depends on “facts and circumstances, including the economic reality of the transaction”, so many tokens can not be called securities.n
nBut simply because some of the token sales do not have to do the registration of securities (the need to publish the company’s business and management, issued an independent, audited financial report) does not mean that the situation of coin-selling buyers will be worse. Coin Center research director Peter van Valkenburgh said:n
nn”Qualified regulated listed companies issue shares when transparency and openness are lower than some good tokens in. In good token sales, the products are already running, and if the token is based on smart contracts and ERC-20, We know exactly how it works.If we can see how many tokens are in the chain chain, we can not dilute the share of the existing tokens by creating or selling more shares. “n
nnBernardi says that not everyone can read the code or analyze the block-chain data, and it does provide space for other projects.n
nn”The supervisor’s task will focus on any previous regulatory task, because it is digital assets, anyone can create things within a second, can be sold to all the anonymous people around the world, do not need to use any national basis Facilities or any regulated infrastructure, such as the banking system, I think there is a lot of need for grassroots and more institutionalized. “n
nnBut that would raise some questions about how to evaluate information for a service, and who evaluates the investor who takes advice. Different projects take a different approach. Community-based investment group Neufund created the website ICO Transparency Monitor, assessing the project (at the request of the community members, not the project itself), the extent to which the participant trusted the other person or the smart contract. As they explained:n
nn”We are not looking at teams, tokens, or their impact on ecosystems.We are not routinely detecting code loopholes.We are looking for the following: Violation of trusts to trust, whose important terms are controlled by a single person, not intelligent contract”.n
nnAccording to their unique way of evaluating the project, the Filecoin product and the SAFT model are treated as non-transparent because the user protection is not a smart contract control but a legal agreement. Business Operations Manager Agnieszka Sarnecka wrote in the message:n
nn”It is based on a trust agreement.” Buyers believe that Filecoin may be the reason that Andreessen Horowitz and Union Square Ventures support these tokens. “However, these users have no choice but to trust the company to issue Filecoins or return funds” (Development of Filecoin’s Protocol Labs did not make an assessment).n
nnThe ETHtrader, an early project in the Reddit forum, created a series of ICO rating criteria for the creation of an ether currency trader. “When subreddit discusses the small scale, you will feel the community’s understanding of the value of the token, but now that you think people are coming in just to make money.If we are more educating people, they will ask for more money,” said Carl Larson, owner of Subreddit. More, we will get a preferential deal. “n
nSome of the discussion questions in the discussion group are more objective and not easy to quantify; for example, “how much of this concept benefits from block chains or smart contract functions” or “whether this document contains high levels of attention, reasonable, publishable content and technology , Whether it is much less than the standard amateur marketing. ” Larson said that since they are gathering the answers, “more subjectivity is acceptable because you will ask many people and weigh their reactions, so it’s like the ICO IMDB (Internet Movie Library).”n
nSo on how the issuer to build a sales structure, you can refer to the founder of the tower founder Vitalik Buterin June blog, one of his recommendations aroused concern: the team to multi-round financing of the structure to be similar to the risk of financing round, the team will mature with the project , To achieve new results, increase the amount of financing.n
nA group of people who know the encrypted currency through Twitter has set up a currency for the issuer. About 20 people at the end of July, about 20 people met in San Francisco, including the Angy Champion de Crespigny, Linda Xie of Coinbase and Spencer Bogart of Blockchain Capital, who participated in the same position as the chief architect of Blockstream, Blockstream, Christopher Allen. Allen said that people can discuss a single tokens sales or projects, but “I want to jump out of specific technical issues or various US regulatory issues, rise to why we do it, and how we do it in a responsible way.”n
nThe group publishes a website that uses academic methods, such as through psychologist Margaret Thaler Singer’s Taxonomy of Levels of Influence to analyze coinage, dividing persuasion into education (encouraging logical thinking, limited consensus) to mind control (no Goal, no definite time, autocratic, hierarchical). They also consider how the economist Elinor Ostrom’s shared resource management design principles apply to the centralization of the chain-chain network, that is, who has the right to use shared resources, and how each person affected by the resource participates in all relevant decisions.n
nSome of the best practices they recognize attach importance to transparency, honesty, and communication with the community, “providing enough information to support shrewd decision-making, honest and accurate representation of your tokens, detailing how the token is used for the network.” They also encourage financing models similar to risk financing rounds, rather than one-time large-scale financing, that is, the existing ICO model.n
nIn fact, many of the best practices are not significantly different from the existing rules of traditional finance, which may also be the reason why the SEC’s DAO token is associated with the 71-year Howey case. Van Valkenburgh of Coin Center said:n
nn”When we look at the elements of community assessment, how to develop, how to publish, whether the code is open source, which matches your expectations of the Howey case, people think that law and technology are separated by millions, but in fact they have similar standards.”n
nnOnly time will tell you if the regulator is so.n

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