August 29, 2017, The Financial Commission, a leading member-driven External Dispute Resolution (EDR) organization for international online brokerages and their end-clients who participate in global foreign exchange (forex), derivatives and cryptocurrency markets, today announces the extension of its Financial Technology (Fintech) certification service to companies seeking capital raises (issuers) via Initial Coin Offerings (ICOs).
In addition to providing dispute resolution services to consumers of retail financial products offered by members, Financial Commission has been certifying trading platform technology for brokers and exchanges operating in foreign exchange (forex), derivative and cryptocurrency markets since 2014.
Initial Coin Offering Certification Committee (ICC)
As part of the ICO Certification service, Financial Commission is pleased to announce the formation of the ICO Certification Committee (ICC), which will consist of a panel Fintech experts from foreign exchange and cryptocurrency markets, who will help drive the certification standards and protocols, and with support from Financial Commission’s existing Dispute Resolution Committee (DRC).
The founding member of the ICC, Financial Commission Chairman, Peter Tatarnikov, said: “The ICO certification service was a natural addition to our existing technology certification service for Fintech companies. Cryptofinancing via ICOs is skyrocketing in popularity yet the process is still ridden with challenges for issuers and investors – so the need to establish best practices for Fintech companies seeking capital raises via cryptofinancing was needed and Financial Commission is pleased to now offer certification to eligible firms seeking to do an ICO.
The certification is limited to the assessment by ICC of the cryptocurrency platform of the issuer being in line with the minimum set of criteria determined by the ICC, some of which may be mandatory for certification approval. Financial Commission will issue certification only when all outstanding requirements have been met by companies that apply for ICO certification, and the standards for ICO certification will continually evolve based on the stewardship from Financial Commission’s ICO Certification Committee”.
Call For Best Practices and Industry ICO Standards
Financial Commission fully supports the need for best practices to be established for ICO issuers. The ICC will help steer this effort and will be supported by Fintech, blockchain, foreign exchange and cryptocurrency market industry experts and advisors who will establish a baseline of best practices and standards that every ICO issuer should demonstrate and as part of the ICO Certification process.
Due to its organizational structure and experience in working with international companies include in offshore and emerging jurisdictions, Financial Commission is ideally positioned to cater to the rising demand of firm’s seeking capital raises via an ICO, by providing the ICO Certification services to international companies.
Financial Commission welcomes Financial Services (Finserv) industry experts within the Fintech community to apply for committee roles – for application consideration -within the newly created ICC, to help support this effort of improving standards for ICO issuers.
Focus on Fintech ICOs
Blockchain and cryptocurrencies are central to Fintech – according to a recent research paper from the Bank for International Settlements (BIS). The amount of money that is being poured into venture capital-backed blockchain companies continues to grow, as per Q2 2017 data compiled by CB Insights as seen in the following excerpt:
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Financial Commission’s ICO certification service will be available primarily to Fintech companies looking to raise funding via an ICO or that have already raised funds and seeking another round through a new offering. Financial Commission will require firms to demonstrate compliance to an extensive list of requirements, in order to obtain certification, and as determined by Financial Commission’s ICC.
Financial Commission will only issue approved certification when a firm has satisfied all outstanding requirements stipulated by the ICC. While the certification will not be an indication of whether the ICO will succeed, or fail, nor act as an endorsement of the suitability of the ICO for any investor, Financial Commission maintains that every ICO should meet a minimum set of ICO criteria required to obtain certification, and as this standard improves it should help contribute to improve the broader industry standards for ICO issuers.
Nature of Relationship to ICO Issuers
Financial Commission’s Committees, including the ICC, DRC, its shareholders, board members, members, advisors, consultants and other staff or contractors may represent – either directly or indirectly – the interest of venture capital investors or retail investors who have already invested in or who are considering investing in various ICOs that are brought forward to Financial Commission for certification/consideration.
While Financial Commission’s ICC may examine many ICOs because of such relationships, certification will only be issued when ICO certification applicants comply with all mandatory ICC standards.
Scope of Certification
As stated above, ICC will certify the issuer’s cryptocurrency platform for being fit for the purposes of the offering and being in line with the characteristics of the offering set out in the relevant white paper. ICC’s certification report is not to be relied upon in any manner as investment, financial, legal, tax or any other advice and shall not be used in substitution for the exercise of independent judgment. Investors shall be responsible for conducting its own investigation and analysis of the information contained in the certification report.
About Financial Commission
Founded in 2013, Financial Commission is an industry-supported Self-Regulatory Organization (SRO) whose members join on a voluntary basis, subject to approval and strict adherence to membership rules, to maintain good standing.
Financial Commission provides efficient compliance solutions to its members, alongside its External Dispute Resolution (EDR) mechanism that serves as an effective channel for processing complaints from clients of member firms.
The ICO Certification service will be initially offered out of Financial Commission’s St. Vincent and the Grenadines (SVG) entity, FinaCom Ltd. To learn more about Financial Commission’s technology certification services, including the ICO Certification service for Fintech companies, click here or visit https://xcv.financialcommission.org
Investing in ICOs represents the most speculative form of venture capital, comparable to private-placements that occur before companies seek capital raises via an Initial Public offering (IPO) by becoming listed on an exchange; however, there are many differences (and increased risk) in crypto-financing compared to traditional methods.
Recent ICO Statistics
Investors have recently flooded ICOs, as the prospects of the underlying products that are proposed to be built on systems that run on Distributed Ledger Technology (DLT) also known as blockchain technology is expected by many to be revolutionary, which has led to a sharp rise in recent ICO funding as seen in the graph below from CoinDesk.
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As technology developers look to integrate digital tokens (smart contracts) into the user experience of their related product/services that are integrated with blockchain, crypto-financing via ICOs has recently emerged as an alternative to traditional financing. To learn more about blockchain, fintech and ICOs, visit the official Financial Commission website at https://xcv.financialcommission.org