A Global View of Initial Coin Offerings (ICOs) and Regulation
Over US$7billion is reported to have been raised this year, with over US$5billion raised in 2017, by way of token offerings popularly known as initial coin offerings (ICOs).
By that measure alone, token offerings have arguably become an important means of fundraising. The legal and regulatory treatment of Initial Coin Offerings is however, often complex and unclear. Since token offerings generally involve multiple jurisdictions, that complexity is compounded by the number of jurisdictions involved.
What does that mean for those seeking to raise funds this way? Simply put, many token offerings will require advice in multiple jurisdictions.
Key ICO regulation questions addressed in this report
- Where should the offering/generating entity be established and do any other laws apply?
- Are tokens regulated investments?
- Are pre-sale arrangements themselves regulated investments?
- Is a prospectus (or other offering document) required?
- If tokens are not regulated investments, do other potential regulatory issues arise?
- Can tokens be offered into the People’s Republic of China (PRC)?
- What are some of the most significant practical issues currently faced in relation to token offerings?
This note was last updated in July 2018 and is not exhaustive of all relevant legal or regulatory issues that may arise in the context of a token offering. Without limitation, this note does not consider matters related to tax. All references can be found in the downloadable pdf.