Raising capital for startups using token generation events(TGEs) such as an Initial coin offering (ICO) has become popular with the growth of the blockchain and crypto space.
The Africa Digital Asset Forum (ADAF), established in Nairobi, Kenya, has taken up the legal challenge of drafting a framework to be adopted across the continent. It will serve as a guide and a blueprint for all ICOs coming out of the African continent.
The ICO Boom
The first ICO was launched by Mastercoin in July 2013, with 42 more happening in the same year. In 2017, however, the number of ICOs increased five-fold. In the first 5 months of 2018, there have been about 310 ICOs. This is already 100 more than the total number in 2017.
With the booming numbers of ICOs globally, regulators and governments have been increasingly cautious, issuing warnings against cryptocurrencies, and in some cases, even declaring them illegal.
The ADAF Draft
With this in mind, tech and blockchain enthusiasts in Nairobi gathered on Saturday, 19th May 2018, at Moringa School to initiate the creation of a framework for regulation of TGEs for the African continent. The motivation behind this is to prevent the mushrooming of stifling regulations from governments to allow innovators to be able to raise funding for startups while protecting consumers from scams and Ponzi schemes.
The meet-up was attended by people from diverse backgrounds including members of EOSNairobi, HealthWealth Coin, law students from Riara and the University of Nairobi, practicing lawyers, entrepreneurs, taxation experts and traders.
The conversation was moderated by Marvin Coleby, an experienced lawyer, instructor, and founder of Raise Impact. A skeleton draft of the framework was created, and members present volunteered to help in developing various aspects of the framework including legal, marketing, consumer protection, taxation and technical aspects.
Africa stands to benefit greatly from a legal framework that helps businesses raise capital and funding especially due to a lack of investor confidence on the continent.
This framework under development has the potential to change the way TGEs are viewed and regulated in Africa and beyond.
By Guest Writer, Mandela