Phony initial coin offerings (ICOs) are a big problem here and abroad. That’s why countries like the Bahamas are taking matters into their own hands and enforcing regulations to ensure they stop.
Fraudulent ICOs have proven to be troublesome in both the United States and throughout the globe. While the ICO remains a popular and common tactic to obtain capital for new businesses, not all these ventures have honesty in their blueprints.
Many startups see ICOs as easy ways to garner funds quickly for their operations and employee wages, so they set up a fund in which investors can offer capital – usually in the form of ether or Ethereum-based tokens – in exchange for an entirely new coin, which they can then use to access the company’s goods and services.
Honesty Isn’t Everyone’s Policy
Though not all fall into this category, several of these startups seeking funding potentially disappear within months of the ICO, taking the money with them and leaving investors with less cash in their pockets. They stand with their pride broken, and all they have to their name is a coin that now serves no purpose in the investing world or beyond.
It is estimated that approximately $500 million has been lost throughout 2018 alone to phony ICOs. That’s a very big number, and some countries are beginning to say, “no more.”
Setting the Table for the Future
One of those nations is the Bahamas. A cluster of islands in the middle of the Caribbean, the Bahamas is widely known as a tourist attraction, but has become a major cryptocurrency haven over the past year. One of the country’s biggest ventures involved releasing its own state-backed cryptocurrency. Now, it’s moving in a different direction by drafting one of the first official regulations built to battle phony ICOs.
The document was created by the Central Bank of the Bahamas (CBOB), which says this will help the country as it prepares to integrate digital assets into its financial service offerings. CBOB believes that the cryptocurrency industry’s approach towards international regulation is “too fragmented,” which makes it difficult to handle or manage the emerging risks.
A Few More Steps
Among the additional amendments in the regulatory framework include those designed to battle crimes like tax evasion and money laundering along with market volatility, one of the biggest problems plaguing the cryptocurrency space. The document is being molded based on recent suggestions made by the International Monetary Fund (IMF).
CBOB later stated:
“The Bahamas must demonstrate safe and sound business practices; show that they have systems in place to measure, monitor and adequately control the market and related risks, and ensure that they have in place auditable policies, practices and procedures to prevent the use of their services for criminal purposes.”
At the Center of Crypto
The country is working hard to build its reputation as a leading cryptocurrency and blockchain hub through its latest partnership with Cuba Ventures Corp. Blockchain Revolupay. The startup has decided that the Bahamas will be the center of its headquarters thanks to its solid IT infrastructure.
The company announced last year that it would be setting up camp in the Caribbean state, and described the facility it was using to reporters:
“The privately held data center with the USA-derived IT fiber backbone is ideal for the company’s blockchain and cryptocurrency deployment. Cuba Ventures Corp. has identified a privately held, carrier grade commercial data center located in the Bahamas with redundant 10 gigabit fiber optic connections to Tier-1 internet backbones in North America. The facility is staffed, monitored and protected 24/7 with the latest in network monitoring and security technologies. The facility is ideal as a primary data mining center for the blockchain powered-Rvolupay Remittance system and the CCU Coin cryptocurrency.”