Blockchain Technology and Financial Regulation : A Principle-Based Approach to the Regulation of ICOs

This paper compares Initial Public Offerings (IPOs) with Initial Coin Offerings (ICOs) and explores their corresponding risks and limitations, with a view to analyse the extent to which the latter should be subject to the same regulatory framework as the former. After assessing the underlying principles of financial regulations for IPOs, we provide an overview of current approaches to regulating ICOs, with a focus on Europe and the U.S. Drawing from the notion of ‘functional equivalence’, we argue that principle-based regulation could be an effective way of addressing the regulation of ICOs, based on an in-depth risk-analysis approach. Finally, we explore the use of blockchain technology as a ‘regulatory technology’ to incorporate specific guarantees into the technological fabric of an ICO, in order to ensure compliance with the fundamental principles of financial regulation