Research On Supervision Advice On The Initial Crypto-token Offering

Blockchain was first proposed by Satoshi Nakamoto in 2008.Featuring decentralization,traceability,high reliability and business continuity,immutability and anonymity,it is considered as a disruptive innovation.Based on this underlying technology,ICO is able to keep issuers and investors in the blockchain platform away from being restricted by the subject,the amount of capital,document disclosure,approval procedures and others.Compared with equity financing and IPO,ICO is more efficient and flexible.ICO is a way of financing with low threshold,low cost and high efficiency,which brings financial support and unlimited hope to start-ups.However,due to the soaring of its transaction carrier – digital cryptocurrency,it has become a hotbed for some criminals to engage in pyramid selling of money laundering,illegal fund-raising,financial fraud and other illegal and criminal activities.It also can get out of the control of government.It can be said that the application of blockchain in ICO is a double-edged sword that can achieve mutual value and may make the legal risks under financial innovation more changeable and complex,which is difficult to control.Based on this,this paper firstly presents the connotation of blockchain and ICO respectively,compares the similarities and differences between ICO,equity financing and IPO from many dimensions,summarizes the development and the value of ICO,analyzes the complementary relationship between blockchain and ICO,and further clarifies the essential characteristics of ICO.Secondly,by revealing the contradiction between the multiple attributes of currency and securities of tokens and the fact that tokens are only identified as virtual goods in China,this paper analyzes the legal risks including the damage of investors’ rights and interests and the fluctuation of economy which may be led to by the unclear identification of the attributes of tokens.Thirdly,centering on the Announcement on Preventing the Financing Risk of Token Issuance jointly issued by seven ministries and commissions including the People’s Bank of China in China in 2017,the paper analyzes the adverse consequences that complete prohibition of ICO regulatory model can lead to,and points out the regulatory vacuum challenges caused by single attribute definition of tokens and regulatory balance challenge due to the unclear delegation and regulation of powers.To deal with these challenges,this paper,based on the reference of international experience,puts forward some regulatory suggestions in line with the actual situation of our country.Specifically,to deal with the challenge of regulatory vacuum,this paper analyzes the background,characteristics,advantages and potential problems of the two modes of penetrating functional regulation in the US and fine-classification regulation in Switzerland.In response to the challenge of regulatory balance,it analyzes the regulatory sandbox model of the UK and Singapore,and explores the regulations on the subject,access,operation and withdrawal of the regulatory sandbox rights.Finally,some suggestions are put forward for the application of blockchain in ICO in China in the future from the three perspectives of considering the inclusion of tokens in the Securities Law’s definition of securities,next on the basis of the classed of Crypto-Token,adjusting or linking up different laws,improving the regulatory sandbox,and balancing innovation and risk.