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The new reversible ICO model, rICO, which is approved by German regulators, allows investors to reserve tokens in the first phase of the offering and purchase them during the second phase.
Unlike the regular pattern of Initial Coin Offerings (ICO), German regulators are begging to change the order by giving the green light to reversible ICO (rICO). rICO is regarded as an advancement to ICO structure with a more secure system that guarantees investors of their investment through blockchain.
The ICO upgrade (rICO) was created by Fabian Vogelsteller, who also developed ERC-20, Ethereum standard. The new rICO allows investors to reserve tokens in the first phase of the offering and purchase them during the second phase.
Also, with rICO, if an investor is no longer interested in supporting the project, the reserved token they have left can be refunded in its Ethereum corresponding value.
Reversible ICO Unveiling
LUKSO was to be the first project to get fundraising through reversible ICO set for next month. However, since it has been scheduled, Vogelsteller had to make public his conclusion with BaFin, Germany’s security regulator, similar to SEC. He asked BaFin if rICO was legal or not and got a response in January that its approval was not necessary. Which means Vogelsteller could go ahead.
He believes that BaFin fancies the rICO because their main function is keeping people safe, which is the primary purpose of the rICO.
rICO, unlike the traditional ICO, exists to protect investors further and get them involved in knowing how a project works. At the same time, rICO eliminates investors’ fear of missing out, giving the right faithful inducement to observe developers and how successful they are after several months.
The entire rICO project was partly inspired by Vitalik Buterin‘s proposal for a DAO-like ICO that enables DAO partakers to vote on milestones and continued funding for a project.
rICO addresses problems of low voting or participation experienced by DAOs. Investors in rICO only have their investment to bother about and are free to pull out at any point.
BaFin’s Opinion about Novel rICO
BaFin has been at the front line overtime for tokenized asset sales, and even beating US regulators by approving Germany’s first security token offering last year.
“The interesting thing is that in the approval, they said that as long as we don’t get ownership on our side before the investors buy (tokens) over time, it’s fine,” Vogelsteller said.
Vogelsteller believes that’s BaFin is impressed with the reversible ICO project so far.
Owing to the nomenclature of Germany’s economy, as the biggest economy in Europe, it is not sure if other regulators would rICO for investors’ protection within smart contracts.