These digital assets can become the alternative for SMEs that find it difficult to get access to traditional loans or financing
The Organization for Economic Cooperation and Development (OECD) considers that the initial currency offering (ICO) can be used for the development of small and medium enterprises (SMEs), which represent up to 70% of jobs in different countries.
To achieve its purpose, global regulators must work together to regulate these assets appropriately, according to what the company explained.
“Although ICOs are considered as a solution to the financing gaps of SMEs, ICOs are not, by nature, the right solution for each project, a differentiation must be made between projects, products or services enabled with blockchain, and businesses, products or services not built on DLT (Distributed Ledger Technology)”, explained the agency which indicates that, in the first case, products enabled with blockchain are the ones which have greater potential to benefit from ICOs.
Through a report, published on the OECD’s website, this institution analyzed the initial currency offering’s potential as a financing mechanism for SMEs.
In this way, and according to OECD, ICOs are one of the most outstanding resource collection methods within the blockchain technology ecosystem, even when companies and individuals wishing to invest in these assets must analyze the situation according to each case and forecast the volatility and risks involved in operating with assets that lack of regulation in several countries.
The international agency also considers that ICOs, duly supervised, would offer to projects that work with Distributed Ledger Technology a new form to raise capital, allowing them to benefit from the efficiency, cost savings,
“They can be a more inclusive financing vehicle by allowing small retail investors to participate in the financing of companies and startups”. Depending on the type of rights assigned to ICO cards, companies can increase venture capital without sharing ownership, thus addressing one of the main impediments to the use of public capital financing”, detailed the entity.
The organization reminds it is important that those responsible for formulating policies generate the necessary conditions to facilitate the development of ICOs in a safe manner, so that this facilitates the use of the tokens that these offers issue, taking into account that ICO can contribute to the ventures quickly.
The OECD publication reminds that, in order to apply the relevant regulation, balanced measures must be sought in order not to deprive ICOs of their speed and benefits, especially when dealing with smaller bids.
Among the recommendations of the group of experts are to take advantage of the global nature of the initial currency offering and establish appropriate cross-border regulatory policies.
As an additional measure, standardized disclosure requirements should be established and investors who participate in these schemes should be given greater protection, including policies against money laundering and against the financing of terrorism, crimes that take some people away from the world of cryptocurrency, by not knowing how they can protect themselves from acts of this type.
By María Rodríguez