Should Cryptocurrency and ICOs be Self Regulating?

| March 8 2018

You have probably heard about Bitcoin thousands of times by now. You have seen it on the news, discussed it with your friends, and even seen your grandmother posting about it on Facebook. Cryptocurrency is the world’s fastest growing asset and the global cryptocurrency market now stands at roughly $450 billion. The amount of money raised by startups via ICO’s has now surpassed early stage VC Funding for internet companies, but they are still not the “gold standard.” There is roughly $8 trillion dollars in gold and $73 trillion dollars in the world’s stock market.  Clearly, there is plenty of room for ICO’s and cryptocurrencies to continue expanding, but there is something holding them back.

The primary concern/question regarding ICO’s is, “Are we sure this can last?” The issue holding most people back from investing heavily into this space is the lack of regulation and security for investors.  

A recent study by EY found that 10% of all ICO proceeds have been lost to hacks and fraud. Forbes points out that “From a legal standpoint, cryptocurrencies are not legal tenders, which makes their status as assets equivalent to collectibles like baseball cards or beanie babies. Thus, exchanges could lose all of investors’ cryptocurrency assets, and investors will not enjoy any government protection.”

How can ICO’s reassure investors that they are in good hands?

As you read this, the SEC and CFTC are pushing to place regulations on ICO’s and cryptocurrency trading, but it is a process.  The chairmen of both the SEC and CFTC have stated that they would like to see existing securities laws enforced for ICO’s. As they work to formalize the regulations, they encourage any ICO’s who are willing, to expand on their regulatory framework.  In short, proactively complying to SEC, CFTC and FINRA regulatory standards would instill confidence with the investing public to prove their money is safe with your ICO, and provide you with an advantage over the rest of the industry.

What is the best way to ensure compliance?

FINRA and the SEC have both passed regulations that require firms to preserve their web content. This is a great starting point for self-regulation. FINRA requires that firms keep a record of all business communications and that any firm that wants to use social media must first ensure that it can retain records of those communications as required by SEC Rule 17a-4.  SEC Rule 17a-4 states that records must be retained and indexed on the indelible media for a period of 6 years and with immediate accessibility for the first 2 years.  It goes on to say that duplicate records must be kept within the same time frame at an off site location. In short, you need to archive all business communications that are seen by the public, whether that be via social media or your company’s public website.

Utilizing a third party’s archiving solution is the most efficient and cost effective way to collect and preserve all of this data.  Working with a company who archives your content in its native format is the best way to ensure your compliance with the above regulations.  Web content preservation collects the data in native format, protecting the collection in a forensically sound and compliant archive that’s readily accessible when you need it.  It is imperative that you feel confident that your web content is being preserved with the most effective, innovative methods that meet regulatory requirements. Additionally, you want assurance that accessing your defensible content collection is simple and quick.

Ready to learn more about the most effective, innovative web content preservation software services?

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