Benjamin Lawsky, the former and well-known regulator of New York’s BitLicense, warns that the current backlash of the ICO is likely to bring a hammer down effect for the entire industry.
The ICO funding mechanism is gaining popularity and Lawsky believes that this will cause regulators to take strict measures against cryptocurrency.
One of the reasons for the crackdown on ICO is also the increased potential for fraud which is associated with the ICO funding mechanism.
Strangely, the idea is coming from an individual who has worked as the superintendent for the New York State Department of Financial Services. This is one of the state agencies which regulates financial products and services and was the first to make an attempt for bitcoin regulation.
In an interview with Money2020, Benjamin Lawsky stated that this is a big question for all of us. For instance, if the ICO gets out of control or if we fail to regulate it the way it should be, it will end up creating a huge backlash for the entire crypto and bitcoin ecosystem.
Lawsky, who is currently running a consulting firm and is also working as a visiting scholar at the University of Stanford, Cyber Initiative, further added that the regulators so far have never experienced the velocity and speed at which ICO it is growing.
Since Lawsky has left, the digital currency field has drastically expanded even beyond bitcoin. It includes a wide range of private blockchains for organizations and cryptocurrencies.
Moreover, it also includes ICOs – Initial coin offerings – a familiar term which represent the process undertaken by a software development team or a company seeking to utilize custom digital currency in order to raise funds from common people.
According to the ICO tracker of CoinDesk, in the last 18 months, the cumulative amount that has been raised from token sales is around $2.67 billion.
Lawsky’s Claims are Well-Supported by His Panel
The concerns expressed by Lawsky did not turn out to be unique or surprising for his panel. Many attendees at the conference kept on repeating the same concerns. They also believe that the growth of the ICO market is likely to bring a hammer down from the regulators on the whole industry. However, many believe that this will come up as the natural reaction towards the development of the market.
In addition to concerns, Lawsky also believes that his claim is not merely a judgment of the ICO market but in fact, he is pointing out the reality that will be observed soon. He said that we will see how regulators will handle the situation when they will face the concern that will be putting the consumers at a huge risk.
Nonetheless, the efforts put forward by Lawsky are well applauded. Because he only aims at raising the possibility of a concern than shutting it down and he hopes that regulators will take appropriate measures to handle the situation and to protect the consumers, should there be any need.