ICOs have been very popular with investors and even teenagers. Youtube videos now teach people how they can create an initial coin offering of their own. And while some say they will surpass the IPO market at some point, some countries are still on the “watch-out” for this type of fundraising.
One recent example is Australia. The Australian Securities and Exchange Commission has just shut down several ICOs with doubtful marketing strategies and possibly, illegal activities.
According to the Commission, ICOs are an easy way for people to lure others to invest and not deliver the intended results. The risk is too high, says the Australian financial regulator.
One of the Commissioners in ASIC said that crowdfunding comes with the relevant legal obligations and such obligation cannot be disregarded.
The format of ICOs in some way predisposes creators to take advantage of raising money from the public. Just because people believe in the future of your project and want to invest, does not mean that you are free from legal responsibility.
Australia is also working on creating s stable tax law on cryptocurrencies. Up until now, there are some recommendations made as to how to proceed with cryptocurrencies in a legal way, but no real laws have been created thus far.
The major fear of the Australian government for now is not to lose tax revenue as a result of classifying cryptocurrencies as taxable assets. People may be tempted to report losses from crypto and avoid paying taxes. The other case is also valid, where people make profits and avoid paying taxes, which results in reduction of the government budget.