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Initial Coin Offerings under SEBI lens
November 6 , 2017
2622 days
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- The capital market regulator Securities and Exchange Board of India (SEBI) is planning to bring Initial Coin Offerings (ICO) under its existing legal framework.
- The popularity of crypto currencies is rising and the number of entities looking at raising funds through Initial Coin Offerings (ICO) has also been increasing.
- The central bank is of the view that these instruments are securities and so SEBI should be the regulating body.
- But the Bitcoins are neither ‘commodities derivatives’ nor ‘securities’ under Securities Contracts (Regulation) Act, 1956
- An ICO, like an equity initial public offer (IPO), is an issuance of digital tokens that can be converted into crypto currencies and are mostly used to raise funds by start-up firms dealing in block chain technology and virtual currencies like bitcoins and ethereum.
- Unlike an IPO, which is governed by SEBI regulations, there is no regulatory body for ICOs in India.
- Crypto Currencies or Virtual Currencies are type of unregulated digital money.
- They are mainly peer-to-peer system, and transacted between users directly, without an intermediary.
- These transactions are verified by network nodes and recorded in public distributed ledger called blockchain.
- Bitcoin is a worldwide crypto currency and digital payment system called the first decentralized digital currency, as the system works without a central repository or single administrator.
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