Crypto Valley Association Issues its Own Code of Conduct for ICOs

In early September of 2017, Ethereum founder Vitalik Buterin said that the world was “in an ICO bubble,” and that “in the long run, the market will need to find a way to judge which projects make sense and what their appropriate worth is.”

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Indeed, an industry that is still so new and unregulated, there is a serious need for guidance (at the very least). In an effort to make the ICO industry more ‘hygienic’ for companies holding ICOs as well as ICO participants, the Zug-based Crypto Valley Association has issued an official Code of Conduct for ICOs. The document is intended to provide guidance on moral, legal, and security practices and obligations in the ICO industry.

Crypto Valley Association President Oliver Bussman told Finance Magnates: “The Code of Conduct was designed to represent and respect the fast-paced nature of the blockchain and ICO space. We want to ensure our members and potential members all adhere to them, so we can ensure a streamlined and concise process for ICOs.”     

The Code of Conduct also contains a section intended specifically for members of the Crypto Valley Association with a CVA-specific Code of Conduct and a section explaining the CVA’s goals and ideals. CVA President Oliver Bussman told Finance Magnates that this section of the code is intended to foster healthy growth of companies within the CVA:

“The Crypto Valley Association knows the best assets to the crypto space are the dynamically talented entrepreneurs that are our members. We want to be sure to provide these members and any new members of the CVA with an ICO-specific Code of Conduct as they embark on their ICO.  It is an exciting process, a process that for many entrepreneurs and companies has the ability to change the landscape of the crypto field.”

This Code of Conduct represents the latest addition in a growing trend of independently-organized structures for cryptocurrency-related practices. In August of 2017, the DABFI (Digital Asset and Blockchain Foundation of India) approached the Indian government with their own framework, hoping to create formal legal structures; in July 2017, the Uniform Law Commission (ULC) met in the United States to draft the “Uniform Regulation of Virtual Currency Businesses Act.”

A New Big Business

The ICO industry began the year 2017 having cumulatively raised less than $300 million (ever).  By the end of 2017, billions of dollars had been contributed to ICOs; more than $743 million was raised in the month on November alone.

Of course, with such incredible amounts of money suddenly flooding into this new space, there have been plenty of individuals who saw an opportunity to make a quick buck. Recently, the FBI began investigating the Confido ICO after it was dubbed an exit scam; the SEC filed charges against PlexCorp for the PlexCoin ICO, which promised a thirteen-fold return within a month–these two cases are just the tip of the iceberg.

While some entities holding ICOs may not be outright malicious, there is at least evidence of some incompetence–a study by the University of Luxembourg Faculty of Law, Economics, and Finance in early December revealed that critical information was often missing from ICO whitepapers, including (in some cases) any valid information about the issuing entity or the technology behind the coin being offered.

The Crypto Valley Association is eager to remove at least some of the risk from the practice of holding ICOs, and to improve the quality of provided through ICOs in general. In a press release, Bussman explained: “The rapid development of token launches has raised concerns around stability and security, and as a leader in this field, it’s [the CVA’s] responsibility to support the industry. The widespread adoption of this framework, combined with careful supportive regulation would bring stability to an exciting but uncertain trend in blockchain.”