Netherlands at forefront of Blockchain, ICO developments: Crypto expert
The Netherlands has an established tradition of being at the forefront of innovation, and it is following this same path when it comes to blockchain and ICO development, according to Emanuele Francioni, founder of Web 3 Ventures - a Netherlands' based incubator for new businesses developing services with blockchain.
"Traditionally, the Netherlands has always been at the forefront of innovation and the blockchain space represents no exception. Activities with the goal of raising awareness and promote sound business development avail of the efforts of both institutional actors and domestic businesses. The former have been quite successful in creating consortia (e.g. National Blockchain Coalition) to render blockchain technology and the underlined crypto space safer and more accessible. The latter represents the backbone of a thriving community dedicated to the advancement of the technology with an ever increasing choice of great meetups and events (e.g. Blockchain in Business, Bitcoin Wednesday and ICOEvents). Even the Royal family plays an important role (e.g. through the involvement of Prince Constantijn in the blockchain initiatives of StartupDelta)", Francioni said while answering a few questions for NL Times.
The Netherlands regulator for financial markets AFM wants organizations planning ICOs to discuss potential regulatory issues before the ICO is announced to the pubic. What is your opinion of the Netherlands' stance here?
"My opinion is that actually the Netherlands doesn't really have a well-defined stance and in that it seems to be aligned with Europe. Even ECB president Mario Draghi expressed in clear terms that his institution does not have the authority to regulate cryptocurrencies. Granted, he was talking about Bitcoin rather than ICOs. However it would be pretty cumbersome to try and regulate the financial instrument currently used to fund and structure the inception of cryptocurrencies, while leaving the currencies themselves well alone. All the AFM really did so far, was to promulgate a very reasonable warning to retail investors aiming at rendering them aware of the high risks associated to participating to ICOs."
As the founder of Web3 Ventures, which identifies a belief on its website that consumers will become a community of owners, what concerns you about the AFM's apparent stance against ICOs that distribute equity?
"Web3 Ventures steers well away from securitized tokens. For the first time in history, we have the capability of removing the financial hurdles related to the creation of digital infrastructures. The internet protocol suite, the GPS, the mobile network, pretty much all infrastructures of the past have been created by governments, most often for military purposes. Opportunity for monetization and market creation was granted only when businesses have been allowed to create applications on top of such infrastructures. ICOs are an incredible financial tool that enables the monetization directly during infrastructure development allowing the community to become a symbolic 'owner' of such infrastructures, rather than shareholders of the companies using them. In our intention, tokens allow access to the infrastructure in the same way tolling grants access to more convenient routes. The more convenient the route, the higher the demand for tokens."
What can investors do to insulate or protect themselves when investing and buying into an ICO?
"Any early stage investment cannot prescind from a meticulous due diligence covering the experience and track record of the management team, the opportunity expressed by the market of reference and a thorough analysis of the business model. Additionally, given the global nature of ICOs and the regulatory misalignment of the different legislations when it comes to cryptocurrency space, particular attention needs to be paid to the governance of the foundations or companies behind the crowdfunding. Finally, my personal advise would be to steer away from projects with a too high of a market cap as they usually result in poor performances."
What advice do you have for companies interested in launching an ICO?
"Eventually the market will be flooded by ICO events. This means that the costs for organizing an ICO with a good probability of success will increase substantially while the proceeds will most likely decrease. As a result, ICO should be adopted only in case of truly disruptive propositions or when the other funding mechanisms are not appropriate to the goal of the crowdfunding event, as in the case of Web3 Ventures. In the latter cases, my advice is to pay meticulous attention to the governance and legal aspect of the ICO and, most importantly, make sure that the decentralization is key to the technology at the core of the proposition."
Whose responsibility is it to weed out fraudulent ICOs or ICOs with an extremely low chance of success?
"Good question. I am personally a big believer of technologically-driven and self-regulating ICO. This is the reason why Web3 Ventures is part of the Interactive ICO (IICO) workgroup, an initiative led by Ethereum foundation member Jason Teusch and its company TrueBit. The IICO aims to solve the most controversial dynamics of an ICO, such as excessive market cap, the uncertainty of valuation and inequality of chances of participation. If an ICO is structured as IICO and the governing smart contracts have been properly audited by a third party there is already a minimal chance of fraud and the contributions are automatically returned to the investors in case of failure to meet the target or over-contribution. Ultimately, is up to the investors to do their due diligence properly. In case of malicious hacks and blatant fraud the competent authority should obviously take over."
Francioni is one of the speakers at ICO Event Amsterdam on Wednesday.
Edan Yago, another speaker at the event, also advocated for letting ICOs develop unhindered, without stymieing innovation by applying new regulations onto this young field.