Digital Tokens Regulation:ICOs And Initial Sales

Digital Tokens raised from ICO is a new financial tool recently,which has been rapidly developed these years,and it helps the start-up blockchain projects raise hundreds of millions of moneys.All the Digital Tokens are public issuance and the investors to invest such Digital Tokens are small and private individuals.All these Digital Tokens are traded through internet platform,which lacks pre-investigation.All the disclosures that made by these Digital Tokens are through the so called �White Paper�.For the protection of investors,it is the common consensus of many countries to look into the Digital Tokens and probably to provide proper regulations.As to the regulation towards Digital Tokens,China finds its own way to achieve it,that is to shut down all the Digital Tokens occurring in Mainland China.It is good for slowing down the deceptions in Digital Tokens,but it also leads to the shrink of development of blockchain projects in Mainland China.Different from the way that China lays on the regulation towards Digital Tokens,the US tries to bring the Digital Tokens into the jurisdiction of SEC in a way to define the Digital Tokens as securities.It requires several conditions to convey the way to regulate the Digital Tokens that US dose,which is in the laws of securities,US finds the way to define the securities broadly.All the investment tools which are consistent with four elements defined by Howey Test are investment contracts in the Securities Act of 1933,which should be considered as securities and required to be regulatedunder laws of securities.This is good to bring the regulation towards Digital Tokens into the jurisdiction of civil procedure by regulate Digital Tokens as securities because that it is easier and faster to solve the disputes raise from investment contracts and it is also easier for the entities in the market to raise the fund through investment contracts that meet the requirement.In China,the Digital Tokens are always recognized as illegal fund raising that might lead to crime.It is so simple and na?ve to bring Digital Tokens directly into the jurisdiction of criminal laws,which would lead to long and hopeless criminal procedure and this might just let the entities in the investment contracts lose their way to protect themselves by locking the assets of the infringe party through civil procedure.With the development of economy,the fund-raising demand from entities in the market are even higher.If it is not to bring the investment contracts like Digital Tokens into the regulation as securities,and put them directly into the criminal procedure,it would severely harm the fund-raising actions in China.Therefore,it is important for China's authorities to bring the experience that US does on the definition of securities which could bring the investment contracts that meet the requirement into the jurisdiction of securities laws of China.This would protect the benefits of investors and at the same time to provide multiple fund-raising tunnels for entities in the market,which eventually develops the economy.However,it is conditional to regulate the investment contracts like Digital Tokens under the securities laws of China.First,we should expand the range of definition on securities under securities laws.Only in this way,we could define the investment contracts which holds two significant marks of securities as securities under the laws.I suggest that we can authorize our Administration to issue the regulations towards investment contracts and define them directly as securities.After the expansion of range of securities definition,the regulation authorities shall bear so much inspection burden.In this way,I suggest we shall separate the regulation towards securities as two layers.The first layer of regulation on securities shall be the main board and other boards which could issue the public securities.The second layer of regulation shall be the private or credit investor to invest securities.We don't have to inspect each of the issuance of second layer regulation,because the second layer of issuance have short amount of fund raising and issued to credit investors.In this way,we shall less the burden of regulation authorities and expand the tunnels of direct fund raising,which would eventually achieve the balance between the risks and fund-raising activities.I have compared the ways to regulate Digital Tokens of Swiss land,Singapore,and Australia and the ways for the four countries or districts for them to define the securities.Trough the comparison,I have those districts are favor of defining the range of securities in a broad way.Because in this way,they can protect the investors as well as expanding the tunnels for the direct fund raising by financial market entities.Therefore,I believe the best way for China now is to expand the range of definition of securities under the securities laws,because in this way,we can protect the investors as well as providing multiple ways for the entities to initiate direct fund raising.