Fintech analyst and research firm Autonomous NEXT has published a new report on the state of blockchain-based initial coin offerings (ICOs).

Released today and entitled "Token Mania," the 70-page publication takes a unique look at the regulatory and operational challenges the novel fundraising model, which is fast becoming the main capital driver in the sector, poses for business and investors.

"We try to give folks that may be deep in financial services, but not deep in the crypto economy, a primer," said Lex Sokolin, the firm's global director of fintech strategy, on the report, though he acknowledged it is not intended to provide legal advice.

Overall, the report singles out six different countries – Switzerland, Singapore, Russia, China, the U.K. and the U.S. – to highlight the state of play for ICOs and cryptocurrencies more generally.

Perhaps most notably, the report considers Switzerland and Singapore to be two of the more advanced nations for creating welcoming environments for fintech and cryptocurrencies. Notably, the two countries have agreed to cooperate on fintech rules.

In Switzerland, business is regulated by the Swiss Financial Market Supervisory Authority, or FINMA, but cryptocurrency companies do not require any specific approval or license, the report finds. Under the law, cryptocurrencies are assets rather than securities.

Similarly, cryptocurrencies are assets in Singapore rather than funding or payment instruments according to the regulator, the Monetary Authority of Singapore (MAS). The authority does not regulate virtual currency transactions, but does monitor KYC and AML, the report states.

"Switzerland is relevant because exchanges and firms are moving there, they're jurisdiction shopping," Sokolin explained, adding:

This is not to say the regulators aren't keeping an eye on things.

This week the Swiss government said it's working on rules for cryptocurrencies. Meanwhile, in Singapore, there is ongoing development of a Proposed Payment Framework (PPF) that would review existing payments and remittance regulations, and this would include virtual currency intermediaries.

Other countries were viewed as less welcoming by the report.

In particular, Autonomous NEXT singled out the U.K. and the U.S. as jurisdictions with high activity, but a lack of legal clarity.

"We looked at the U.K. and U.S. because there's quite a bit of blockchain activity at the enterprise level and the consortium level, but there's not much clarity around the crypto economy," said Sokolin.

The UK, like Singapore, has a regulatory sandbox to help test out new financial projects. As a result of that, the regulator, the Financial Conduct Authority (FCA) is taking a wait-and-see approach to distributed ledger technology, according to the report.

As it stands, cryptocurrency and tokens are considered "private currency," and as for ICOs specifically, issuers are operating on their own interpretation of the law. The FCA has published a broad paper on DLT and crypto tokens, but this is not binding, so the landscape for ICOs in the U.K. could very well change in the near future.

The U.S. meanwhile was described as having an "alphabet soup of regulators" that makes issuing tokens more complex. Then there's also the individual 50 states that implement their own rules, such as the so called "BitLicense" in New York, and Delaware, the "home of American incorporation", which has introduced a variety of blockchain-related legislation.

Sokolin told CoinDesk that the complex regulatory environment in the U.S. means less experimentation is ongoing domestically:

Also examined is China, which is fast emerging as one of the more active countries for cryptocurrency and blockchain innovation.

There, the report outlines how the People's Bank of China (PBoC), the country's central bank, has established a digital currency research institute that provides assistance to startups and projects. Tokens there are considered a non-monetary digital asset, according to the paper.

It goes on to outline how China has its own plans to introduce a fintech sandbox, but that ICOs more generally are unregulated.

According to the Autonomous NEXT report, more than 2 million people have taken part in ICOs in China, while the PBoC is considering regulations to address the perceived high risk and to monitor "non-professional investors."

"The population is more connected into it," explained Sokolin, adding:

The Chinese government appears to be open to the crypto economy in some ways, but regulatory attention from government may create tension.

"We don't see an outcome there yet – meaning it could go any direction – but there is a lot of tension in the system," said Sokolin.

Russia, on the other hand, has not been very welcoming to cryptocurrencies with authorities likely to categorize crypto-tokens as legal financial instruments or derivatives in the future. If the government hands down a more formal recognition of cryptocurrencies, they will be subject to KYC and AML regulations, transaction monitoring, and taxes, the report states.

That is not to say the regulators themselves have been averse to the technology. The full report, for example, gives an overview for how the Bank of Russia is moving on its own distributed ledger projects.

For more information, you can download the full report here.

Businessmen on coins image via Shutterstock