At the end of 2017, a group of renowned scientists with academic education and extensive experience in banking, start up companies, management, crisis management, regulatory and transition processes, and tax legislation decided to make a difficult expected step. Because practically everyone agrees that it would be necessary and rational to set up an independent and non-profit scientific body that would, with a practical platform, provide some kind of soft and professional evaluation and regulation of ICO coins – tokens (ICO or Initial Coin Offerings, took this burden on their shoulders).
The idea is simple. Coin issuance or ICO projects are useful, profitable and offer a high added value to the market. The only problem is that at the beginning it is difficult to eliminate bad projects, as the current regulators do not solve this problem, properly.
Otherwise, individual governments are trying to limit the scams in this area, but the “profit hungry” – often as well with luck of knowledge – investors are barely to be touched.
Namely, the regulators are not customer oriented, but concern the project holders or the coin issuers. This multiplies the “hard” regulation of ICO projects, with diverse bans and “grey” zones, in which neither side knows exactly what is, and what is not allowed. In addition, regulators do not work on the project locally, but protect local investors. For example, if an issuing coin is issued by a company from a lesser known African or Asian country, but American citizens are investing as well, US regulators become responsible for this project.
On the other hand, investors do not even know what is happening in the background. When the project opens the door to invest, the investors opens their wallets, many times without thinking, just – hoping that they will not miss the perfect opportunity – they are mainly looking for fabulous profits, preferably overnight!
Unfortunately, between 85% and even 95% of all these ICO projects are below average or long-term ineffective. Looking from a different perspective, we can see a completely different picture. At least five percent of the projects are excellent, long-term stable and allow investors as much as very short-term and also long-term benefits.
It would be a shame or even irresponsible that due to the gap between the unwieldy, awkward or even deliberately exploitative founders of projects on one side and the earning willing investors on the other, there is a decline in the extremely interesting form of investment support, and the realization of good or excellent ideas.
The crypto-coin issuance (ICO) projects form the multi-billion USD market already today, and it’s constantly increasing!
In the past, ICO projects raised billions of USD of public funds for the launch of a variety of ideas. Most of them started with unrealistic and questionable projects, the bearers of which were entrepreneurs with lack of knowledge, often also without any practical experience. Their focus was to raise money and then think about how the idea would be realized in practice. Because they have not studied the market well before, and the real possibilities for carrying out the idea – many times they started the project completely without the help of the experts – the project was already condemned to failure.
The result was a mass of failed projects and a long line of “ground floored” investors. Otherwise, lately they learn through their mistakes and do not trust blindly to all people anymore, but also project promoters developed their skills, as well. The case is similar to, for example, to the development of alarm devices: improvements and more advanced solutions are followed by burglars, which constantly complement their knowledge. In other words, if people decide to sell glass for diamonds, at least a certain percentage will succeed.
Of course, with this kind of activity, they throw a “bad light” on the whole industry or at least on quality ICO projects.
The solution is a single assessment platform, with a focus on long-term monitoring of project development!
For the credible assessment of ICO projects and the separation of “grain from weeds”, a platform for unifying the criteria and realistic evaluation of ICO projects should be presented with the aim of standardizing key factors and the frame of certification, as we know in developed industries.
“The platform should be based on effective criteria that have already proven to be good in practice: an expert assessment is provided on a standardized basis, with clearly-posed questions, clearly evaluated scoring-based answers, and simply presented results that would reveal the general “picture” of the ICO project.
The results should be presented unambiguously, easily, and above all they should be made available to the public.
The assessment should, however, be left to credible, independent and qualified experts. Their findings would be presented to the interested public, without giving in to any pressure and bypassing any personal interests of anyone involved. This will then make it easier to decide whether or not to trust the ICO project and it’s founder.”
Prof. Dr. Slobodan Slovic
The government’s regulators should also connect with the platform, to represent them the positive effects of such investments, and to direct the country towards “soft” regulation.
So, we need approaches that would, on the one hand, limit the founder and make it difficult to exploit the situation, and, on the other hand, through direct communication with investors, reveal the professional background of the project, its potential profitability and, above all, the real possibility of ICO project’s realization.