Vitalik Buterin plans to improve ICOs with DAICO

The creator of Ethereum wants to use benefits of Decentralized Autonomous Organizations to make Initial Coin Offerings more responsible and democratized
07 January 2018   760

On January 5th, Vitalik Buterin, the creator of Ethereum, posted a note under the name “Explanation of DAICOs” on the Ethereum Research forum, describing the ways of improving the ICO model by merging in some of the benefits of DAOs in a way that will minimize complexity and risk.

DAICO sketchDAICO sketch

As Vitalik states in the post, DAICO contract is published by a single development team that wishes to raise funds for a project. The DAICO contract starts off in “contribution mode”, specifying a mechanism by which anyone can contribute ETH to the contract, and get tokens in exchange. This could be a capped sale, an uncapped sale, a dutch auction, an interactive coin offering, a KYC’d sale with dynamic per-person caps, or whatever other mechanism the team chooses. Once the contribution period ends, the ability to contribute ETH stops, and the initial token balances are set; from there on the tokens can become tradeable.

If the voters are very unhappy with the development team’s progress, they can always vote to shut the DAICO down entirely and get their money back.
 

Vitalik Buterin

The creator of Ethereum also notes that DAICO has a mechanism through which token holders can vote on resolutions, which can be made either by raising the tap or by permanently self-destructing the contract.

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Swiss Regulators Published ICO Guidelines

The Swiss Financial Market Supervisory Authority FINMA published today initial coin offering (ICO) guidelines  
16 February 2018   160

The guidelines set out how it intends to apply financial market legislation in handling inquiries from ICO organizers. According to it, regulators will oversee and regulate ICOs anti-money laundering laws.

FINMA clarifies how token issuers should proceed in the country. The regulator also stated that there is a sharp increase in the number of Switzerland-based ICOs. This led to questions about applicable regulations.

The press release noted that financial market law and regulation aren’t applicable to all ICOs. Each case must be decided on its individual merits.

The regulations will be based on economic function and purpose of the tokens issued by the ICO organizer. Due to the fact that there is no generally recognized terminology for the classification of tokens in the world,  FINMA categorizes tokens into three types:

  • Payment tokens are synonymous with cryptocurrencies and have no further functions or links to other development projects.

  • Utility tokens are tokens which are intended to provide digital access to an application or service.

  • Asset tokens represent assets such as participation in real physical underlyings, companies, or earnings streams.  

FINMA will handle ICO inquiries according to three different categories, based on the type of tokens they’ll be issuing.

  • Payment ICOs (payment tokens), that issue tokens that are transferable and function as means of payment.

  • Utility ICOs (utility tokens), that will not qualify as securities, as long as their purpose is to confer digital access rights to an application or service. If a utility token functions as an investment in economic terms, it will be treated as a security.

  • Asset ICOs (asset tokens), that issue tokens that will be seen as securities. This means they’ll be treated like equities or bonds. These will be subject to strict requirements.

Our balanced approach to handling ICO projects and inquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.

Mark Branson

FINMA CEO