Regs for initial coin offerings are coming to MENA, courtesy of the Emiratis: Safe, investor friendly initial coin offerings (ICOs) are set to debut in the Middle East and North Africa as the UAE takes the lead, placing itself among the first in the world to step in and regulate ICOs, Matt Smith writes for Wamda. The Emirati Securities and Commodities Authority (SCA) announced last December it would introduce rules to govern ICOs by the end of June.

What on earth are ICOs? As the name suggests, ICOs are the rough, cryptocurrency-based equivalents of IPOs — a crowdfunding method and essentially a way to speculate on cryptocurrencies. They are today’s biggest trend in the crypto-world. An ICO works in similar ways and achieves the same aims of IPOs. But instead of issuing shares, a company issues a coin, or token, of its own making, and offers it to investors as a blockchain project associated with a quality whitepaper. Willing investors then purchase the tokens for their price-equivalent in other, more widespread coins, such as Bitcoin and Ethereum, or just plain flat currencies. Unlike IPOs, however, investors cannot claim stakes in, and do not receive dividends from, the issuing companies.

Is this just another crypto fad? ICOs raised USD 5.6 bn in 2017 alone, and some USD 6.3 bn in the first four and a half months of 2018, according to figures cited by Blockgeeks. But ICOs have gained a reputation of attracting ponzi schemers and con artists, mainly because they are subject to little regulation and a lack of required paperwork. Although average returns are staggeringly high, ICOs are also based purely on speculation since investors are investing in “an idea of a project.” However, ICOs give promising blockchain projects a chance to make an impact and are also easier to launch than IPOs.