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Research suggests that transparency is the key to utility-based crypto projects

June 26, 2020

The researchers suggest that utility token issuers should offer the public a basic level of transparency before they are listed on exchanges. They say that this can increase stakeholder confidence and attract new entrants. This is key to launching cryptocurrencies on June 25, according to the Duke University School of Law’s FinReg blog.

Disclosing certain information is key to the performance of the crypto space

In the blog post the authors Nicholas J. Krapels and Dan Liebau They found that most crypto industry experts disagree that utility token issuers disclose enough information to their stakeholders. This could be the main reason why these cryptos don’t work well on the secondary market.

Krapels and Liebau outlined seven easy-to-follow information disclosure recommendations that they say are equally relevant to issuers, buyers, brokers, and utility token regulators.

Research suggests that transparency is the key to utility-based crypto projectsResearch suggests that transparency is the key to utility-based crypto projects

The recommendations apply to both financial and non-financial matters. Financial details include information about the issuer, initial and current cash positions, and symbolic information about Treasury. Non-financial information includes contact information, project progress updates, documentation, and open source software repositories.

Price and information correlation

The authors drew on a comprehensive study that was recently published in SSRN academic research. The piece contains short case studies too Tezos, Hedera, Algorand and Thorchain highlight exemplary behavior in the area of ​​information disclosure. The study found that best practices for minimal disclosure positively impact these cryptocurrency and utility token prices.

Nicholas J. Kraps, associate professor of strategy and entrepreneurship at SKEMA Business School, China, and Dan Liebau, founding director of Lightbulb Capital and associate member of the faculty at the University of Management in Singapore, told Cointelegraph:

“Some would still say that inside information is the only way to make a profit in crypto markets. Others want to boost the industry and be treated fairly. If you are looking for a way to increase the widespread acceptance of blockchain, Promoting ecosystems is the right thing to do. ” Kind of defense we need. “

As Cointelegraph previously reported, Oxford Law researchers argued that asymmetric information can lure investors into “pump and dump” systems.