Perspective Prospectus: UAE Finds Solution for ICO Liability
RegulationBit News Today2 min read
In a significant regulatory development for the cryptocurrency industry, the United Arab Emirates (UAE) has announced a solution for liability in Initial Coin Offerings (ICOs) in the aftermath of a disastrous launch by a local startup. ## Regulator Lays Out Requirements
The UAE's financial regulator, the Securities and Commodities Authority, has submitted a preliminary proposal in which it mandates that ICO issuers provide upfront disclosures. This ensures that the public is fully aware of the risks involved before they invest in the token sale.
The regulator also requires that token issuers prove their credentials, such as their team, roadmap, and financial capability, with specific data that regulators are currently working to define. Under the proposal, issuers must locate a grievance handling agent in the UAE, who will be responsible for ensuring the document's accuracy.
The moratorium on ICOs that the regulator imposed a fortnight ago is expected to be lifted.
The peak body representing fintech and crypto startups, The Dubai Blockchain Alliance, has welcomed the development, which partners with the regulator and other institutional stakeholders in promoting the growth of blockchain technology. ## Background: Local Startup's ICO Pebble
This news comes in the aftermath of the botched ICO by Pebble, a local startup. However, the startup failed to provide any utility for its token and was unable to provide verifiable information to its investors.
The Pebble saga, as it has come to be known, has caught the attention of the UAE government, which has been rapidly developing into a global fintech center.
The UAE's Crown Prince of Dubai, at the time, called upon the fintech industry to work with the government in developing guidelines for ICOs. This was a priority as a local startup had just completed an ICO. The local blockchain community responded quickly, launching a working group.
When news broke that the Pebble startup had failed to make good on its promise, the regulatory and law enforcement arms of the government took notice. ## ICO Regulatory Developments
In the face of the recent upswing in ICO activity and the exponential growth of the market, regulators worldwide have been hurriedly trying to come up with rules for the space.
This led to several companies pulling the plug or issuing disclaimers on their ICOs in the United States.
The Chinese government imposed an outright ban on ICOs, while the Japanese government requires all token issuers to register with the Financial Service Agency of Japan.
