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Is ICO affecting Fintech?

over 1 year ago by Luigi Muscat Filletti
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The cryptocurrency sector in Malta is seeing exponential growth in terms of value, meaning that the call for the recruitment of talent in Malta is at a high - the adoption of blockchain technology within the Fintech industry is at a steady incline, and so the rate of employment in Finance and Technology is at an increase too. With the cryptocurrency market proving to be a hot one, we take a look at the emerging activity of ICO, what it means and how it’s affecting Fintech.

What is ICO?

ICO stands for Initial Coin Offering - a digital innovation which creates a platform for fund-raising outside of the traditional financial system. ICO forms part of the Cryptocurrency world and offers easy and efficient funding solutions for organisations and individuals alike, allowing users to fund and invest in projects they value and see potential growth in, and even purchase shares of a company. ICO is somewhat similar in concept to an IPO (Initial Public Offering), being a process through which companies raise capital. The two main aims for ICO are to put a new digital currency in circulation or to finance a new project.

ICO works through the trading of cryptocurrency tokens - this typically begins with a startup idea for a blockchain-related project, where the startup offers investors some units of a new cryptocurrency in exchange for established and higher valued cryptocurrencies such as Bitcoin and Ethereum. This is completed through blockchain technology, which enables virtual coins or tokens to be issued in exchange for a cryptocurrency payment. Similar to the affects of stock behaviour in the public market, if the new cryptocurrency obtained by the investors appreciates in value, the investors enjoy a profit.

That being said, participating in an ICO is a gamble of a lowly valued cryptocurrency in the hope that it will increase in worth down the line. The blockchain system insures that the transactions are done in a decentralised manner, thus the issuance of cryptocurrency tokens are unregulated. This in turn leads to a concern on legality.

Are ICOs Legal?

The answer to this question remains uncertain, at least for the time being. The Securities and Exchange Commission (SEC) had publicly announced that ICOs must protect the investor, causing some governments around the world to keep informed on new blockchain technology and issue suitable regulations in the process to prevent fraud through scams. Therefore, as some jurisdictions gain awareness of ICO activity, they work to ensure security and address financial risk concerns.

The reality is that there are some users who take advantage of this system by scamming the community through non-existent projects or proposals. Although the right regulation would prevent cases of fraud and cybersecurity threat to users of this blockchain system, some users state that an introduction of regulation would diminish the purpose of ICO, which provides a faster and less complex procedure when compared to traditional methods.

What Recruitment Opportunities does ICO present?

Recruitment in ICO operations within the Cryptocurrency sector would firstly involve talented individuals within the Tech industries to uphold the systems through which the ICO would function, meaning that careers in technology in Malta would be at a high - Programmers, Software Developers, Data Analysts and Data Miners possess the necessary skills in this regard.

The Financial Services is also seeing a number of career opportunities in finance and banking - Fields in Risk and Compliance, Accounting jobs in Malta, Financial Analysts and Statisticians offer the expertise needed to  guide their clients who seek funding.

This would however require knowledge on the subjects of blockchain, cryptocurrency and ICO landscapes and therefore demands the understanding of tax and compliance laws, opening doors in Legal opportunities in Malta too.

Some investors are concerned with the risk of fraud and money laundering due to the insufficient regulation, therefore by introducing a suitable regulation within Fintech companies, such companies would be able to put investors’ minds at peace. With Fintech companies operating within a legal framework, they will be able to provide better services for their customers and clients, highlighting the importance of understanding new regulations of ICO and Blockchain topics and keeping up to date with emerging trends. It therefore goes without saying that employment in legal fields would be on the rise if such regulations were put into place.

All in all, if used properly, ICO promises to be an innovative method of raising funds for projects and proposals and creating new digital currencies for the crypto market. Governments are slowly realising the economic growth of cryptocurrency through Fintech companies which are deploying blockchain technology in their operations, and due to this the correct regulations may be put into place to ensure a fair and just method of trade.